Fuel Tax Doesn't Fool Us

The government are to press ahead with another fuel duty increase in April, only 6 months after the last one and with oil prices hovering near record highs. Not surprisingly a large number of companies with vested interests, including the hauliers, are up in arms.

The government defends their position by saying that fuel duty is lower in real terms than it was 10 years ago, but this is only because they didn't dare raise the duty after the 2000 fuel protests and are now trying to play catch-up. So instead of justifying the tax in any way they just imply that the tax is a fact of life, and that we shouldn't complain because it costs us less than it used to.

Fuel duty is an emotive issue, but we only ever seem to hear one side of the story. The hauliers and rural dwellers shout the loudest and drown out the environmental lobby. From an environmental point of view one can see the advantages of this tax. It penalises excessive petrol use, either through thirsty vehicles or unnecessary journeys, and the worst offenders are worst hit. If it worked it would probably encourage greater use of public transport, a move to smaller and more fuel-efficient cars, and possibly move freight off the roads and onto rail.

But the big problem is that the tax doesn't work. It's not high enough to moderate behaviour except for the poorest sections of society, meaning it is a highly regressive and divisive tax which is very unpopular with the public. Setting the duty at a level where it would significantly reduce petrol consumption would be political suicide, and the government knows it. This leaves us with the distinct impression that the tax is not environmentally-motivated at all, and that the government just wants a large and predictable source of revenue.

If the government is to win any support for this tax at all it should promote its environmental benefits. It should ring fence the money and spend it on public transport and encouraging cycling and walking so that the tax we pay on our polluting petrol use is seen to be used to offer alternative transport options. The revenue should also be diverted towards energy efficiency in the home so that increased carbon emissions in one area lead to greater efforts to reduce them in another. Such initiatives would help the tax to become less regressive, as the resulting lower energy bills would help the poor more than the rich.

But they won't do any of this because that's not what the tax is about. We're not fooled, and they know it, and that's why they defend this increase in with such a weak argument.

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