Perhaps we shouldn’t be surprised that Chancellor George Osborne has moved to stop the fuel escalator put in place by the last government. Drivers were being held in a triple whammy of the rising cost of a barrel of oil, the fact that fuel duty is a percentage rather than a fixed amount and the fuel duty escalator was adding to the pain, regardless of the price at the pumps.
High fuel taxes are very bad for economic growth. Instead of our spending flowing, via local shops and restaurants, through the economy, fuel tax just whizzes straight from our bank accounts and back to the Treasury. Fuel taxes don’t revive the parts of the economy that need it.
So, it’s no surprise to see on the small print that the projected revenue that Osborne and Treasury will lose from these reductions in taxation will be made up for in increased taxes for the oil producers.
But the truth is they cannot do without the easy fix of cash that comes from loading at least 60 percent onto the true cost of a gallon of unleaded.