Friday, September 01, 2006

The Fuel Duty Escalator Must Not Be Revived

There seems to be one thing that the Tory and LibDem leaderships agree on - and that's that climate change is something which must be tackled by increasing so-called environmental taxes. The LibDems have already announced their plans, which involve green taxes partly paying for lower taxes for people in the lower tax bracket. The Conservatives have signalled their intention to follow suit, but the detailed plans won't be announced for some time to come. I'll remain open minded on it until I see the detail.

However, and this is a big however, I was astonished to read in The Sun this morning that Steve Norris is advocating the return of the Fuel Duty Escalator, which would add another 3.5p to the already exhorbitant price of petrol. We already have a Fuel Duty Escalator and it's called the world oil market. Steve is an urban beast - more at home in the city than the countryside. Owning a car in rural areas is not a luxury, it is a necessity for many.

The price of petrol is already threatening the mobility of many low or fixed income earners in the countryside and even more expensive petrol would be yet another blow to them.

The Fuel Duty Escalator is a crude mechanism which is entirely regressive. For Steve to say: "You will see the reintroduction of a fuel duty escalator, I'm quite sure," indicates a certain lack of imagination and flies in the face of a Cameron spokesman who says later in the article: "We will continue to think the unthinkable and examine new ways of doing things."

The Fuel Duty Escalator is not "a new way of doing things". It is regressive, deeply unpopular and should be consigned to the dustbin.


Anonymous said...

I remember the good old days when the Government reduced tax to change behavior. Why, oh why, oh why doesn't any of the major parties advocate tax incentives for companies that have their employes working from home for a porpotion of the week? Surely eliminating the journey completely is a far better option than either cramming people on a train or taking their cash?

Just makes be believe this is less to do with global warming and more to do with funding a State machine that is costing more and more.

The Daily Pundit said...

The money's in the climate change industry these days. Steve could have a directorship or two lined up.

Sir Compton Valence said...

I was really surprised to see all this fuel duty stuff. It unsettles the core vote, particularly in the country, and while it may, I suppose, make some appeal to a certain type of voter the party is trying to attract, it will most certainly scare away a lot of others. We don't like our cars being messed with.

Anonymous said...

Spot on - we can't complain on one hand that the poor pay a disproportionately high percentage of their income in tax, and then increase the forms of taxation that cause this anomaly.

The whole "green tax" thing is entirely bogus as Paul alludes to. The tax is only green if it stops people doing the "bad thing" - but if they stop doing the "bad thing" then the government won't get the tax revenue, so you can't cut other taxes as a consequence of the green tax. If the tax is successful it won't increase revenues.

Unless of course it's raised enough that some people stop but the few people who continue are paying so much that the revenue is higher. i.e. rich people can fly and drive cars and poor people can't.

As someone who joined the Conservative Party because I believed that the market was the most successful mechanism for lifting people out of poverty and giving them opportunity, these are increasingly dark days. A Conservative Party leadership that believes its aim in power would be to fiddle with how it gets the money to run ever bigger government is depressing in the extreme...

Benedict White said...

I am sort of split on this. When we were in power we did introduce the fuel duty escalator to deal with global warming. It sort of worked.

However Iain is right to say we already have one, its called the oil markets, and doubly right to say that ppwning and running a car in the sticks is vital.

Personaly I think rather than increasing fuel duty on fossil based fuels I would rather see fuel duty on BIO fuels reduced, which can be mixed with the ordinary to produce greener fuels. They could have done that during the fuel portests but didn't.

Anonymous said...

Any prospective Conservative government which proposes to increase ANY taxes should be laughed out of court. Conservatives should simply walk away from it.

Not that that would worry Dave, of course. He'd be so delighted to get rid of all those inconvenient old core voters, who are standing in the way of modernity and progressiveness by obstinately insisting that a future Conservative government should adhere to the party's principles.

Anonymous said...

The price of fuel is not and has never been a major factor in car ownnership.
When one factors in depreciation/loan costs/servicing/insurance/road fund and punitive parking charges,petrol is the last of your worries.
Radical action is required to build a road transport infrastructure that saves billions of gallons being burnt in jams.Coupled with punitive road fund duty on any vehicle over 1.5 lit culminating in £10000 for the most obscene SUV/ and 5 lit upwards.
Stop fiddling with the escalator or we shall pay more in tax than the cost of the fuel,although perhaps thats what some eco warriors might want

Anonymous said...

Increase of 3.5 pence? It was a lot more than that in the report I read - 5% per year over and above inflation. Not that it would affect me *directly*, I don't own a car. Even so, IMO it's rank stupidity.

So what's the State of play in Desperate Dave's policy think tank? Well, we've had cuddle a glacier, hug a hoodie, stay snuggled up to the EEP, embrace positive discrimination and now a love-fest with the Greenies. Gives one such a warm glow, doesn't it? Except that the warm glow is anger building into rage at the total ineptitude of this bunch of useless tossers.

Read today's entry from Tom Paine on lastditch.blogspot - that's how many of us feel (up to 10 million according to last Sunday's papers) and ask yourself if you truly think Dave has the desire, the insight, the conviction or the guts to make a difference, 'cos I don't.

Anonymous said...

Alcohol (especially beer) and smoking should be taxed more heavily, and we should stop booze cruises to the Continent, regardless of what the French and Belgians say. Income should be taxed less. But I can't see why fuel should be taxed more heavily. Britain only produces 2% or so of the world's CO2 emissions, so even eliminating any production of CO2 in these islands wouldn't even be noticed in the struggle to stop global warming.

Anonymous said...

I would have thought an old school Tory would have been a big fan of 'Green Taxes'. Why?

Tory's don't like taxes. They also feel that spending should be on the lesser side of the argument.

Green taxes can achieve both these goals. If you work on principle that people should be free to spend what they earn; and responsible for their actions. You would be against taxes like income tax and capital gains.

However, you would be for people paying hte social cost of their actions. Simply put, if one accepts that the true cost of owning a big car, or a factory made good, is greater than its market cost (which it certainly is) becuase of externalities such as pollution. People should be presented with the real cost of their actions. If this happened people would be presented with the real rewards their work deserves and presented with the real costs of their consumption.

This principle can be extended to include other externalities like anti-social behaviour and crime.

Conservatives believe that we are all responsible for our own conduct. Thus the argument for lower taxes should be more focused as described above.

People rightly note that this would probably result in a reduction in the tax take - especially as high externality taxes would reduce the consumption of the relevant goods. But this is the point - if you accept that the tax take is rightly low - then you will have to lower your spending.

Conservatives can only win the argument if they are true to their beliefs. If they oppose rightful policies becuase it will cost them more to drive their 4X4 in the country - they are not conservatives - but populist and selfish.

Tax the bad things in society - not work!

Anonymous said...

Fuel duty isn't the only option. I have posted some green taxes for the Tories on my blog here.

Johnny Norfolk said...

Its this sort of thing that realy worries me about the New Conservatives.

They act just how you would expect New Labour to.

I have voted yes to DCs 'Built to Last' but not this sort of thing.

Peter from Putney said...

Wake up everyone! We already have a hidden Fuel Duty Escalator - it's called VAT, applied at 17.5% on the ever inreasing cost of petrol & disel and is currently raising more revenue than would have been the case had the FDE not been deferred over the past two years.

Anonymous said...

Mojoman: why, precisely, do you describe sports utility vehicles and those with engines of more than five litres as "obscene"?

They are common around here - not Islington or wherever, semi-rural South Gloucestershire, where for many their possession is essential.

Proposing that they should be taxed out of existence, with all the attendant consequences for those who work on the land, simply because you don't like them - now that's really "obscene".

Anonymous said...

I cannot believe what I have just seen in the online Telegraph. I just cannot believe it.

Conservatives signal massive tax hike on motorists and air travel."

This must be the shortest political suicide note in history.

Anonymous said...

green discussion is hilariously proceeding on Guido where you can access the miliband wiki site and then edit the text if you use firefox; contributions are coming in faster than moderation (or censorship when the government does it) can remove stuff.

neil craig said...

In theory the escalator is a perfectly reasonable way to account for inflation thereby not interfering with the market mechanism of prices going up when supply is tight.

The real issue is whether overall taxes should go up or down. The LD position of reducing taxes & paying for it by tax increases ("Green ones") is, at best, clumsy sleight of hand. We will see whether the Tories will play the same game.

The whole catastrophic global warming thing is a fake. There is no such threat. This is merely another example of the "endless imaginary hobgoblins" (Mencken) that government threaten us with to keep us obedient, & put up taxes.

Anonymous said...


It's no surprise that Labour can't get their heads around this concept but I despair that the Tories can't.

Anonymous said...

If you want to listen to the original Steve Norris interview it's about 13 minutes in on Thursday's World at One.

Anonymous said...

Don't worry everyone. The Labour government will never re-introduce the fuel-duty escalator (for those with short memories, we came off the fuel duty escalator in 2000, from 2000-2003, fuel duty increased in line with inflation, and since 2003, fuel duty has been FROZEN).

So people will have a clear choice in the general election. Labour: the party of the ordinary man! ;-)

The Military Wing Of The BBC said...
This comment has been removed by a blog administrator.
The Military Wing Of The BBC said...

it profits not a man to sell his soul for the entire world

......but whales??

and Friends of the Earth???

what is it that your suppose to do to prove your dreaming and your not sure?

oh that's it - read something

oh shit - i can read this.

Anonymous said...

Settle down, Norris has zero say in Tory policy.

Cameron is not daft. He knows he can't win the next election it's up to the government to lose it.

Blair is doing a fantastic job on that front and the deeply unlovable Brown with his 'previous' and scottish accent will never be able to pull it around.

Cameron is not going to announce an increase in petrol duty, the market will bein to throttle back car usage soon enough.

Iain Dale said...

Anonymous, Steve is Head of the Transport Policy Group!

Anonymous said...

The Fuel Duty Escalator is not "a new way of doing things". It is regressive, deeply unpopular and should be consigned to the dustbin.

It's also absurd. It singles out one particular use of burning fossil fuels. If we are to have enviro-taxesof some sort to reduce our CO2 emissions, then you should tax CO2 production equally - whether it's by car, or by gas to heat yor house, or by industry or whatever.

I rather suspect that the fuel tax is already too high.

Anonymous said...

Anonymous, Steve is Head of the Transport Policy Group!

Which is the probem, really. CO2 emissions aren't a transport issue - they're a fuel burning issue. It is eminently sensible to try and internalise the costs of emitting CO2 with some kind of tax / tradeble permit / whatever.

It is manifestly stupid to treat a cubic metre of CO2 emitted by a car differently from a cubic metre of CO2 emitted by a power station, factory or house.

Anonymous said...

Anon of South Gloucester,having passed through your beautiful county many times,I have not seen many mountain passes and snow covered slopes that might demand a really chunky powerful vehicle.
A jolly good Land Rover is perfectly adequate one does not need Cayenne Turbos,X5s,Hummers and assorted hero jeeps.
These are for posers and should be fiscally penalised.

Anonymous said...

mojoman may well be a right wing freak or an eco warrior,I dont know,but when it comes to these crazy huge sheds on wheels then he is bang on.
I agree true land owners workers need an all terrain vehicle and it is acceptable to rebate these if true need is shown.
Frankly anywhere bar a ploughed field they are an absolute menace and must be banned from all city and suburban areas.

Anonymous said...

As head of the Transport Policy Group Steve Norris won't be deciding fuel duty.

Anonymous said...

It's not correct to say that the fuel duty escalator is "entirely" regressive, as poorer people in general tend to own smaller cars and drive shorter distances.

If anything, it is more something that disadvantages country against town.

However, I applaud you taking a stand against Cameron's increasingly unrealistic "green" policies. He must realise that if he goes too far down this particular road he will really come a cropper.

Inamicus said...

Amanda Platell seemed to think it was going to be policy from reviewing the papers on Marr this morning (and was highly critical).