Fuel Duty rates

No-one can argue that fuel prices are very high at present - although some may argue that for environmental reasons they need to be higher - and the issue of fuel duty rates rears its ugly head again.

The argument from our MP runs like this...

The soaring prices we are seeing at the pumps now are just a glimpse of what is to come next year. In addition to rising inflation, 2010 will see increased VAT and the UK Government's absurd fuel duty escalator which will push prices through the roof [...]

We need the full fiscal powers of a normal, independent nation so we can set fair taxes that do not penalise rural motorists.

Fuel duty is about 70% of the price of every litre, and yields an additional £260m for every 1% higher. Scotland's share is therefore, in round terms, £25m for every 1% change in in fuel price.

Now the maths get more complex. And here I use round numbers for ease of arithmetic.

Price of fuel: £1.20/litre
Duty and VAT: 84p (70%)
The petrol: 36p (30%)

A reasonable price for fuel is exactly what Mr MacNeil? You have never answered this question or even given the slightest indication of the proximity of the balance position or the fuel duty regualtor, but you started issuing press vague but vituperative releases when petrol was over £1/litre, implying that 90p/litre might be somewhere in the right region.

Ok, lets redo the maths:

Price of fuel: 90p/litre
The petrol (unchanged): 36p (40%)
Duty and VAT: 54p (60%)

That 10% change in duty implies a fiscal cost of £250m each and every year.

Which could be funded by cutting student grants in half, or by removing all the support for ferry, rail, air and other transport directorate services.

I am sure that Mr MacNeil has thought this through and can tell us exactly where this money can be found, in a way that won't be painful for any sections of the community. Or not.

(I do know where it could be found, but I'd love to hear his explanation)