It's all about the Oiiillllll!!!

Wonko posts about the threatened fuel protests:

A treasury spokesman said cutting tax would not solve the problem of high oil prices. That is correct but about 4/5ths of the price of fuel is tax so you see, it's already started?

This line was taken by some politician this morning on the radio. ”The problem is high oil prices. There is nothing we can do about that.”

Do they honestly think we are that stupid? The problem for the consumer is high prices of fuel at the pumps and most of that price is taxation.

There are only two lines that the government can reasonably take on this issue to avoid calling us stupid. Firstly that a high price at the pump is a good thing because it reduces consumption and, therefore, will save the world from the day after tomorrow and/or will reserve stocks. Secondly that the government needs the tax revenue for public services.

These lines are mutually exclusive as a reduction in consumption will result in a reduction in tax revenue (though a balance can be struck I suppose).

Any minister that uses the high oil prices line in an attempt to explain why there is a threat of a protest either does not understand the grievances of the protesters or thinks we are simpletons.

Frankly I am pretty confident that the issue for the government is simply one of tax revenue. The argument will be that this money needs to come from somewhere and if fuel duty is reduced some other tax will need increasing. This reasonable proposition requires two other factors to be true before it can be seen as a truly successful argument. People must not feel over taxed and they must feel that what tax they pay is good value for money.

Bzzzzt, no and bzzzzt, no. You are the weakest link. Goodbye minister.

The treasury admits that:

"More than half the fuel used in the UK bears little or no fuel duty at all... so seeking to address the problem of high oil prices through road fuel duty alone would do nothing for the majority of consumers."

It follows that seeking to address environmental issues and/or demand through taxation of less than half the fuel used does nothing to address fuel usage by the majority of consumers. Remember that the next time a minister suggests environmental issues as an excuse for higher fuel taxation.

Also note the usual You are stupid! declaration via the use of the high OIL prices phrase.

Posted by John at September 7, 2005 12:13 PM | TrackBack