Stealth Fuel Taxes Equal to 10% Extra Income Tax

Whilst rising petrol prices are hitting all drivers, the ABD's (Association of British Drivers) fuel tax calculator [1], that compares fuel tax with income, shows that the low paid are being forced to pay the equivalent of significant extra income tax, even as much as 10%.

Someone working full time on the National Minimum Wage earns about £10,000 per year [2], if they drive 10,000 miles in a car that averages 30 mpg with a petrol cost of 112.9p per litre, they would pay a total of £1017.79 per year in fuel tax and VAT on their fuel. This is equivalent to an additional income tax of over 10%. [3]

By contrast, because drivers pay the same tax on petrol no matter how much they earn, someone earning £20,000 would only pay the equivalent of 5% extra income tax. Whilst someone earning £100,000 would pay the equivalent of just 1% extra income tax.

ABD spokesman Nigel Humphries said: "High fuel prices hit the low paid much harder than the well paid. The Labour government must surely learn from its mistake on the 10p income tax rate, and act to reduce the burden on drivers caused by rising oil prices and extortionate fuel taxation rates. Doing nothing is not an option."

ABD spokesman Ben Adams pointed out that the Chancellor can easily afford to act: "With the extra revenues from oil company taxes on the back of recent price rises, there's no reason not to cut fuel duty immediately by say 5p or 6p with a further 5p or 6p cut if the high prices remain for the medium term. No net loss of revenue to the Exchequer, just good sense governance."

ABD Chairman Brian Gregory said: "Most people do not realise that the true cost of petrol at present is just 45p per litre - everything above that is tax. That's a tax rate of 146%. You only have to compare this with the basic income tax rate of just 20% to see the extent by which the government are ripping drivers off."

Barnsley Nationalist