Monday, April 02, 2007

Gordon Brown Admits He Was Wrong...Sort Of

As Gordon Brown's problems on pensions mount (and typically he is out of the country just as the brown stuff hits the fan), let me add further fuel to the fire with an update on Air Passenger Duty. It seems we were right all along, and, as is his wont, Gordon Brown has managed to solve the problem by rewriting history.

There was a resolution on March 22 as follows:

“13. Rates of air passenger duty



(4) The amendments made by this Resolution have effect in relation to any carriage of a passenger on an aircraft which begins on or after 1st February 2007.
(5) But if the amount of duty due from any operator in the accounting period ending before 21st March 2007 increased as a result of those amendments, the operator is to pay the amount of that increase as if it became due in the first accounting period ending after that day.



And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.“

Paragraph (5) says that to the extent that the increase in tax was uncollectable because there had not been a resolution in parliament, then the tax is treated as arising at a later date. In other words, because the government didn’t get its act together in time, the law will deem that events didn’t happen when they did.

Anyway, lets draw a line under that … and look at petrol duty (which was subject to the same issues as APD) instead.

After the 2006 Budget, the duty rates were as follows (source: HMRC website):

The new effective rates of duty from 1 September 2006 will be:

Light oils Effective duty rate per litre (£)
Ultra low sulphur petrol (ULSP) 0.4835
Sulphur-free petrol (SFP) 0.4835
Unleaded petrol that is not ULSP or SFP 0.5152
Aviation gasoline (AVGAS) 0.2884
Light oil delivered for use as furnace fuel 0.0729
Other light oil (including leaded petrol) 0.5768


In his speech at the time of the PBR in 2006 the Chancellor said:

“And while I will go ahead with an inflation rise in fuel duty from midnight
tonight, of 1.25 pence per litre, I will not restore the fuel duty escalator and
I have rejected a real terms increase in fuel duty.”
However in his 2007 Budget Speech the Chancellor said:

“For the coming year I will set fuel duty rises at 2p a litre, for 2008 at 2p,
and for 2009 1.8p. But I will defer this year's annual fuel duty increase by six
months to October.”

So it would appear that the Chancellor is proposing a 3.25p a litre rise. But apparently not, because the draft legislation in FB 2007 reads as follows:

10 Fuel duty rates and rebates
(1) The Hydrocarbon Oil Duties Act 1979 (c. 5) is amended as follows.
(2) In section 6(1A) (hydrocarbon oil: rates of duty)—
(a) in paragraph (a) (ultra low sulphur petrol), for “£0.4835” substitute “£0.5035”,
(b) in paragraph (aa) (sulphur-free petrol), for “£0.4835” substitute “£0.5035”,



(9) The amendments made by this section come into force on 1st October 2007.

Point 1: The Chancellor appears to have double counted his increases, because the rate for petrol and diesel from October 2007 will be 50.35p compared with the 48.35p set at 1 September 2006. The 1.25p increase decreed in December 2006 appears to have been subsumed in the 2p increase.

Point 2: As with the Air Passenger Duty increase, there was no PCTA resolution with regard to the 1.25p increase at the time of the PBR or the Budget (nor at any other time as far as I am aware). Furthermore the Budget Resolution for the 2p increase is effective only from October 2007. It looks as though there is no statutory provision for the collection of the 1.25p increase put into effect at the time of the Pre Budget Report. The government has effectively accepted that they were wrong on the APD. What are they doing about fuel duty? Will Ed Balls be airbrushed out of Politburo photographs?

Note: This is not my own work. It was sent to me by a reader who wishes to remain nameless.

10 comments:

Savonarola said...

Iain it was bleeding obvious that this highly techinal analysis was not your work. Another illustration of Brown's lack of attention to detail in his rush to thieve from us. He is below contempt. Adair Turner has him in his sights.

non-brownite labour apparatchik said...

Brown may be still hiding abroad as per usual when the shit hits the fan but word is he is reeling over this pensions business particularly as Lord Turner has more or less called him a liar and unfit to be PM. The Tories should really be pressing home their advantage now.

Polls later this week will show Brown's support ebbing away, Miliband is coming round to the idea of standing, and winning.

mystic marc said...

I predict that, unfortunately, Brown will be P.M. but will lose the next election because people will remember the major role he played in the New Labour project as the proverbials come home to roost.

Anonymous said...

Yawn. Brown is the past-master of technical spin and complex, shifting-sand arguments wrapped inside deceptions wrapped inside spins wrapped inside cosy little lies. But alas! Most people don't give a stuff, so he gets away with it. No doubt Tory chancellors ran similar operations. I would guess that a few civil servants in the Treasury probably decide all this for whatever personal reasons they have, mostly personal gain or the gain of family and friends, and the rest of us just have to suffer it.

Anonymous said...

Anon@8:08

so are you a spinner or just a little liar?

I lost a pension, Brown is SCUM.

jafo said...

Anon at 8.08 - no Tory Chancellor destroyed the private pension system in this country - that was all Brown's work, and he deserves ALL the credit..........

Anonymous said...

But Jafo, have you not heard the news that Norman Lamont and David Cameron recommended a similar change and that it was only vetoed by Kenneth Clarke, the latter being one of the few decent chancellors this country has ever had. So sadly incompetence isn't just limited to New Labour, loathsome though Brown undoubtedly is.

Anonymous said...

anon@8.08pm:

"I would guess that a few civil servants in the Treasury probably decide all this for whatever personal reasons they have, mostly personal gain or the gain of family and friends, and the rest of us just have to suffer it. "

Hell no. Goerdon decides what he wants to happen, egged on by his SpAds, who will bully the desired path through whatever constitutional conventions exist, and which civil servants are there to defend.

Remember how the shockingly unprincipled Denis MacShane squealed when Turnbull had his "Stalinist" jab at Brown: how dare unelected civil servants have a view on how the elected Government abases the constitutionn?!

The way in which a tax was collected - the Air Passenger Duty increase - without any prior authority from the House of Commons, not even under the Provsional Collection of Taxes Act, is a clear example of this - decent civil servants bullied to weasel the thing through the constitutional safeguards.

Your slur on civil servants "decid[ing] all this for whatever personal reasons they have, mostly personal gain or the gain of family and friends" is pretty contemptible, as well as being constitutionally illiterate.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Anon 12:36, you are right, it was not just Brown, despite all the Daily-Mail-induced frothing going on from people like Dale who just repeat whatever the Mail tells them to of a morning. For example, I quote from the Financial Times day before yesterday - note the Nigel Lawson action.

"Even the Treasury proved too optimistic: big employers have now largely closed their schemes to new members. But the tax credit change, albeit important, is not the only reason. A host of mistakes and surprises undermined the schemes: the restrictions on alleged "overfunding" introduced by Lord (Nigel) Lawson; tighter regulation, in response to injustices and scandals; errors by actuaries in forecasting life expectancy and prospective returns at the peak of the stock market bubble; and declining interest rates."

FT article on Brown Pension Dividend Tax Decision, 2 April