Tuesday, October 19, 2021

A fuel shortage is hardly the day to pay down your fuel tax

Most of us are prepared to suffer. But for some, even having half a tank of fuel on the run is too much of a strain

It’s today’s headline: Britain’s petrol stations are running out of fuel and the haulage industry is worried there will be more shortages. As this happens the PM calls for a review of taxes and pressure increases on the transport minister to compensate the shippers who are being left with too little fuel.

With 5-10% of the UK workforce employed in transport, this shortage comes at a bad time for the economy and workers. For every million people employed in the industry, it generates £16bn for the economy. That’s a lot of money and for some, any inconvenience caused by shortages can hardly be helped. For them, what’s happened, is unkind. Even having half a tank of fuel on the run is too much of a strain.

For truckers it’s bad. They are already a poor minority. They are the guy who does the bulk of the work that doesn’t go to the banks or investors. Their incomes are often low, as they work for the moment and run the mile to make ends meet. As a result, they don’t have many rights.

For the UK as a whole, the picture is a bit clearer. As is the question of whether taxes need to be cut on fuel as the economy benefits from greater investment. The price of fuel is set by international demand and the cost of international oil and gas is set by world markets, which can fluctuate. The cost of oil and gas is, in fact, less of a factor now than it used to be. There is, nevertheless, little to be said in favour of higher taxes on fuel, which are seen to raise prices.

Britain has some way to go before it can afford to have no fuel stations. But if we don’t want to become a country in which the transport industry is the only thing keeping us going, it’s time to level the playing field.

This week, Greg Clark, the transport minister, said that he would be releasing a conversation paper on fuel. Soon after, MPs, ministers and ministers’ advisers from the Confederation of British Industry were on the airwaves to talk about it. But, more than a decade after the chancellor made his famous Treasury speech in which he threatened to raise fuel duty by 50p a litre, it feels as if the principle of a tax system that benefits all has never been as discredited as it is now.

If the transport industry no longer benefits from subsidies, as Clark says it does, it is time to take the pain for the rest of us. But we would be voting against our own interests if we allowed no one to take any sort of loss from fuel prices.

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