Slashing the cost of fuel - would it help?
Discussion
Heard someone on the radio today ranting about the price of fuel and how slashing it would result in kickstarting the economy.
Certainly got me thinking. We pay something in the region of 70p on top of what it costs to refine plus the cost for the retailer to make money.
If that 70p was halved, and pressure was placed on suppliers to reduce their costs accordingly, would it mean that the economy would pick up? Householders would be spending less on fuel and more on other items, items should be cheaper due to lower transport costs and there might be an increase on the level of fuel bought (it has reduced significantly) which would limit the losses to the treasury from the tax cut.
Plausible?
Certainly got me thinking. We pay something in the region of 70p on top of what it costs to refine plus the cost for the retailer to make money.
If that 70p was halved, and pressure was placed on suppliers to reduce their costs accordingly, would it mean that the economy would pick up? Householders would be spending less on fuel and more on other items, items should be cheaper due to lower transport costs and there might be an increase on the level of fuel bought (it has reduced significantly) which would limit the losses to the treasury from the tax cut.
Plausible?
Well that would be abandoning all green policies in one swoop.
That aside from memory fuel brings in £27billion so halving it crudely would mean a £13.5billion defecit increase. Remember this is received by the govt straight away no waiting for tax returns.
Now the govt are trying to find £10billion cuts in welfare which is a struggle I doubt they could go any further.
That aside from memory fuel brings in £27billion so halving it crudely would mean a £13.5billion defecit increase. Remember this is received by the govt straight away no waiting for tax returns.
Now the govt are trying to find £10billion cuts in welfare which is a struggle I doubt they could go any further.
Quite possibly.
I've heard a lot of people have stopped going out for the weekend in their cars to eat somewhere different, high teas, quaint restaurants in seaside villages etc. because the price of fuel is scaring them off.
On the plus side it keeps the roads clear at weekends, on the downside, a lot of small businesses suffer (tearooms, chippies, and the like).
This is in twee areas of Central Scotland, in the countryside. I have no idea how townies will fare.
I've heard a lot of people have stopped going out for the weekend in their cars to eat somewhere different, high teas, quaint restaurants in seaside villages etc. because the price of fuel is scaring them off.
On the plus side it keeps the roads clear at weekends, on the downside, a lot of small businesses suffer (tearooms, chippies, and the like).
This is in twee areas of Central Scotland, in the countryside. I have no idea how townies will fare.
Does this then demonstrate, that we cant be green and a capitalist economy at the same time? Supply and demand drops because the government are trying to squeeze vehicles off the road by ramping up the cost of motoring? Its a knock on as it affects the businesses of garages, supply of tyres, oil and other consumables and we stop buying fuel above a critical point. Whilst they keep increasing prices upon it, they are only shooting themselves in the foot as the amount we buy falls.
It would be interesting to see government figures on spending to see where the biggest strain was, and where the largest supply was.
It would be interesting to see government figures on spending to see where the biggest strain was, and where the largest supply was.
Chicken Chaser said:
Does this then demonstrate, that we cant be green and a capitalist economy at the same time? Supply and demand drops because the government are trying to squeeze vehicles off the road by ramping up the cost of motoring? Its a knock on as it affects the businesses of garages, supply of tyres, oil and other consumables and we stop buying fuel above a critical point. Whilst they keep increasing prices upon it, they are only shooting themselves in the foot as the amount we buy falls.
It would be interesting to see government figures on spending to see where the biggest strain was, and where the largest supply was.
Over the past two years there has been a massive decrease in fuel bought. Partly by higher mpg vehicles but the vast majority being cost. It's made a sizeable hole in the coffers. It would be interesting to see government figures on spending to see where the biggest strain was, and where the largest supply was.
And forecasts of drastically high mpg cars mean a funding shortfall going forwards so VED will rocked upwards or road charging. However what happens the if even more are working from home???
Lets just say I can see vat moving to 20% on everything ie gas electric foods everything to counter the fuel decline (also its odd vs all other countries which has vat
Kinky said:
In principle a great idea.
In reality, if the fuel duty was halved I do not believe for 1 second that the price of goods would drop. So, yes, we'd pay much less for fuel, but high street product prices would not drop. That's what I would expect anyway (sadly).
Competition would soon sort that little problem out. As already said fuel is the life blood of the country and pretty much controls the prices of everything we buy.In reality, if the fuel duty was halved I do not believe for 1 second that the price of goods would drop. So, yes, we'd pay much less for fuel, but high street product prices would not drop. That's what I would expect anyway (sadly).
Westy Pre-Lit said:
Kinky said:
In principle a great idea.
In reality, if the fuel duty was halved I do not believe for 1 second that the price of goods would drop. So, yes, we'd pay much less for fuel, but high street product prices would not drop. That's what I would expect anyway (sadly).
Competition would soon sort that little problem out. As already said fuel is the life blood of the country and pretty much controls the prices of everything we buy.In reality, if the fuel duty was halved I do not believe for 1 second that the price of goods would drop. So, yes, we'd pay much less for fuel, but high street product prices would not drop. That's what I would expect anyway (sadly).
As it stands, the high level of tax on fuel actually serves to stabilise the price at the pump, shielding families and businesses from wild price fluctuations which happen in countries with low fuel tax. If we remove that tax and put it elsewhere to balance the books, fuel consumers will be completely at the mercy of global crude oil prices which will be very bad for business.
The 1p cut enacted by Osborne a few months after raising VAT to 20% didn't help, because the end result was a 3p tax rise instead of 4p. Freezes and even minor cuts won't lead to a drastic difference so the problem is it'll have to be cut so much to make a major difference that the Treasury would have a heart attack. Even if it'd pay off long term.
It's not just about how much you drive, how much you'd spend on fuel and how much food in the shops cost as a result. It's about the Government taking less of your money at source. If you end up spending £50 less on petrol every month, you'll probably spend it somewhere else. That alone makes little difference but when 20 million people are spending £50 less on petrol every month, that's £12billion going back into the economy rather than straight to the Government. The better part is it's not like one single house building project or another round of QE, because you can only build one house once. We'd be talking about £12billion going back into the publics pocket every year on the spin.
It's not just about how much you drive, how much you'd spend on fuel and how much food in the shops cost as a result. It's about the Government taking less of your money at source. If you end up spending £50 less on petrol every month, you'll probably spend it somewhere else. That alone makes little difference but when 20 million people are spending £50 less on petrol every month, that's £12billion going back into the economy rather than straight to the Government. The better part is it's not like one single house building project or another round of QE, because you can only build one house once. We'd be talking about £12billion going back into the publics pocket every year on the spin.
otolith said:
Environmentalists tell us that high fuel taxes suppress demand. If that's so, lowering fuel tax should lead to more fuel being used, offsetting some of the loss to the treasury.
High fuel taxes do more than supress demand if they're too high, but you're not far off to be honest. Who had a diesel car 20 years ago when petrol was reasonably priced?davepoth said:
As it stands, the high level of tax on fuel actually serves to stabilise the price at the pump, shielding families and businesses from wild price fluctuations which happen in countries with low fuel tax. If we remove that tax and put it elsewhere to balance the books, fuel consumers will be completely at the mercy of global crude oil prices which will be very bad for business.
??????I don't understand the logic here, however, whilst I'm mulling it over I'll have a pint of whatever you're drinking.
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