Budget 2011

monkey_boy · 23 Mar 2011 at 16:11

Hi All,

I hope I've not missed a glaringly obvious thread. I've just been looking through the budget info on google news and am trying to figure out what it will actually mean for the motorist.

The key points seem to be:

VED will rise with inflation

Fuel Stabilizer - Can't see any info on how it will work and where the money will come from for it.

1p/l cut in fuel duty - paid for by increase in north sea oil and gas production levy.

My main question that I can't find an answer to is - Won't the oil companies just pass this increase in their costs back to us, negating the point of the fuel duty reduction?

DM · 23 Mar 2011 at 16:15

What about Scotch, has that gone up

monkey_boy · 23 Mar 2011 at 16:16

DiamondMark said:
What about Scotch, has that gone up

Yes it has, but it seems a waste to use it to power your car

[TW]Fox · 23 Mar 2011 at 16:19

monkey_boy said:
Fuel Stabilizer - Can't see any info on how it will work and where the money will come from for it.

He explained it quite clearly - the money comes from increased tax on production, and it's pretty simple how it works.

For now, the fuel escalator of 1p+inflation has been abandoned (But the inflationary increase is back from next year). However, if oil dips below $75 a barrel for a sustained period, it comes back.

Thats it - thats all there is to it.

Won't the oil companies just pass this increase in their costs back to us, negating the point of the fuel duty reduction?

Well the tax is presumably on profits - so you cant really do that.

Skeeter · 23 Mar 2011 at 16:24

In simple terms:

Fuel prices will continue to rise, but slower than they would have done before. And we get a 1p reduction as of tonight as a bonus.

DM · 23 Mar 2011 at 16:31

Skeeter said:
In simple terms:

Fuel prices will continue to rise, but slower than they would have done before. And we get a 1p reduction as of tonight as a bonus.

Thank god for that i was thinking of getting a push bike.

Rotty · 23 Mar 2011 at 16:38

I heard the approved mileage allowance has gone up to 45p, has the amount for over 10k miles been increased too ?

Cosimo · 23 Mar 2011 at 16:41

DiamondMark said:
What about Scotch, has that gone up

SIN TAXES

No new increase on alcohol or tobacco. Pint of beer up 4p, bottle of wine up 15p, bottle of spirits up 54p. 25p on can of "super-strength" lager. Pint of lower strength 2.8pc abv beer to fall by 18p.

Tobacco duty increases by 2pc above inflation. Hand-rolling tobacco up by 67p. Pack of economy cigarettes up 50p, premium cigarettes up 33p. 10p on pack of five small cigars, 17p on pack of pipe tobacco. Tobacco duty regime reformed

OllyM · 23 Mar 2011 at 16:42

Rotty said:
I heard the approved mileage allowance has gone up to 45p, has the amount for over 10k miles been increased too ?

No, still 25p a mile over 10k.

DM · 23 Mar 2011 at 16:42

54p bloody liberty i might send that swine an e mail and complain about that!

csmager · 23 Mar 2011 at 16:49

monkey_boy said:
My main question that I can't find an answer to is - Won't the oil companies just pass this increase in their costs back to us, negating the point of the fuel duty reduction?

It's only on North Sea Oil. They're not going to sell much if they start selling it above market price just to offset a tax levy, are they?

LeeUK · 24 Mar 2011 at 00:48

My local Asda has reduced fuel by 1p this evening (back to what it was on Monday anyway :rolleyes:

) but the local Shell and Jet garages haven't reduced it yet.

Biohazard · 24 Mar 2011 at 02:17

[TW]Fox;18734052 said:
Well the tax is presumably on profits - so you cant really do that.

There is little to stop them as far as I can tell.

MrMoonX · 24 Mar 2011 at 06:41

garages round here this morning havent changed prices, the murco garage has actually gone up by 1p from yesterday lol

Fr0dders · 24 Mar 2011 at 07:21

Biohazard said:
There is little to stop them as far as I can tell.

well if they start charging more, for a product that cost the same, there profits will increase, and thus they will pay more tax ? negating the point of the exercise as they still end up with the same net amount.

csmager · 24 Mar 2011 at 07:35

If they start charging more, they won't sell any - fuel co's will just buy it from elsewhere. Oil is a huge global market - not just North Sea Oil.

Trying to pass it on is a pointless exercise.

Biohazard · 24 Mar 2011 at 12:49

MrLOL said:
well if they start charging more, for a product that cost the same, there profits will increase, and thus they will pay more tax ? negating the point of the exercise as they still end up with the same net amount.

Cost the same? How do you mean?

Anyway, increase the product sale cost high enough to factor in the tapering tax so you end up with the same profits as before, the end result being customers are paying that tax in effect nullifying the rate introduction for your business.

Biohazard · 24 Mar 2011 at 12:50

csmager said:
If they start charging more, they won't sell any - fuel co's will just buy it from elsewhere. Oil is a huge global market - not just North Sea Oil.

Trying to pass it on is a pointless exercise.

If it is not passed on it will hit the industry by way of jobs they are now saying, which can bring negative synergy with the other tax streams.

Fr0dders · 24 Mar 2011 at 13:07

Biohazard said:
Cost the same? How do you mean?

ok so lets assume that the actual cost of the product (before fuel duty and VAT etc..) is a nice round 50p per litre.

So the petrol is sold for £1.30 a litre which has a profit of 4p a litre or whatever.

If they then increase that, to say £1.32 a litre artificially to claw back what the government takes in tax, they are now making 6p per litre profit, whereas before they were making 4p per litre

So profit has gone from 8 % on petrol to 12 %

Greater profits, greater tax (presumably if this is going to work) so the whole exercise ends up pointless as whatever they charged extra (say 2p a litre) they just end up paying again in greater tax.