| Government's £505 million windfall |
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From the start of the tax year on 1 April until Friday 16 May, the Government has raked in a windfall of £505 million in tax due to the rising price of oil - the same as what will be raised by the proposed 2p fuel duty rise in October during this tax year. The findings have come from the British Chambers of Commerce fuel duty model which takes account of monthly fluctuations in:
In the March budget the Government based its assumptions on oil revenue at $83.8 per barrel. Since then the cost of oil has rocketed, reaching a high to date of $126.40 per barrel. This increase in the price of oil has increased the profits of the oil companies that are subject to North Sea Oil taxation and the price of fuel at the pump upon which consumers pay VAT. The BCC model estimates that the increase in the Government's North Sea Oil tax revenues will be £390m of the £505m windfall, and the remaining £115m is the extra VAT on fuel at the pump. With the Treasury estimates on what it would bring in on fuel tax woefully out of line with reality, this £505 million windfall in less than two months must surely rule out the 2p rise scheduled for October Thames Gateway Chamber of Commerce chief executive Tracey Manley said: "We have taken soundings from our members and with the recession already biting, it is incomprehensible they should be asked pay more for their fuel. Many are struggling to remain competitive.
"Price hikes work all ways. Our members are having to pay more for goods they receive which are mainly delivered by road. This results in them having to pass on their costs. Profit margins are being squeezed to death and it is simply unjustifiable."
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