Fuel prices and the war in Iran/ Lebanon

facade

https://forums.moneysavingexpert.com/discussion/comment/81916205#Comment_81916205

Apparently, according to the BBC

she "will not tolerate" energy firms "exploiting the current crisis to make excess profits at consumer's expense"

So that's all sorted then 🤣

(Remember 17% of any increase in pump prices goes straight to HMG as VAT…)

giraffe69

(Remember 17% of any increase in pump prices goes straight to HMG as VAT…)

Why 17% and not 20%?

user1977

https://forums.moneysavingexpert.com/discussion/comment/81920247#Comment_81920247

Because of arithmetic. The VAT portion is 17% of the gross price (or 16.6666666% if you'd rather).

Martyn1981

https://forums.moneysavingexpert.com/discussion/comment/81912587#Comment_81912587

£80, ouch, that's about 4,000 miles.

Too soon? 😉

facade

https://forums.moneysavingexpert.com/discussion/comment/81920247#Comment_81920247

Because the increase includes VAT at 20%.

A 12p increase is actually 10p + 2p VAT, 2p/12p x 100 = 16.666666%

On the other hand, the upcoming 5p rise in fuel duty doesn't include VAT, so it will actually be 6p (5p + 20%) at the pump.

Aretnap

(Remember 17% of any increase in pump prices goes straight to HMG as VAT…)

This is of course not true because increased spending on fuel does not for the most part represent new spending, but is simply spending that is displaced from other sectors of the economy.

In other words, if people have to spend more money on petrol they will have less money to spend on, say, eating out, so the tax take from restaurants will fall by an equivalent amount. Or even more, due to the destructive effects of restaurant closures, increased unemployment etc.

Actually increasing the tax take without increasing tax rates requires economic growth, which has been very hard to achieve in the last couple of decades and will be even harder in the face of an energy crisis. The notion that the government is secretly rubbing is hands in glee at all the extra tax revenue that is going to come in from higher energy prices is for morons.

LightFlare

interestingly, I have noticed that diesel appears to have risen more in price than petrol

At some stations, it’s as much as 20p a litre more now

facade

This is of course not true because increased spending on fuel does not for the most part represent new spending, but is simply spending that is displaced from other sectors of the economy.

Only if the spending is diverted from 20% VAT rated items like eating out and alcohol. For a lot of people it won't be.

If it is diverted from what would be savings, zero VAT items like food (buy Tesco Cornflakes instead of Kellogs), 5% VAT domestic energy (turn the heating down even more) then there is a net gain for the Treasury.

The upcoming 5p increase in fuel duty does produce a 5p gain for the Treasury though (unless people buy less fuel as a result of it…) as 6p less spent on anything else would at most only move the 1p VAT over to petrol (and could even gain that 1p too if the 6p came from food spending or potential saving).

Bigphil1474

The spread in prices is more likely to do with when their tanks were last filled up and how quickly they are drained. If wholesale petrol prices dropped by 30p a litre today, the petrol in the tanks would still need to be sold at a higher price to cover the cost they paid when they bought it. A quickly emptying petrol station tank would be able to offer lower prices sooner as they would get to the cheaper stuff first. The converse applies when prices are rising.