VAT on Fuel Tax question

JohnM14

I think there must be something unethical with the price of fuel. Let me explain. Much of the price of fuel is actually tax. For about every £10 we put in our tank I think about £9 is tax. On top of this we are paying 17.5% VAT. Theoretically, for every £10 of fuel I'm sure we should only pay 17.5p, i.e. the VAT on the actual value of the fuel. However we are paying £1.70. If, like me, you use about £40 per week that means you are paying £353.60 per annum in VAT instead of the £37.44 that I think we should be paying.

In short, I'm sure that it is unethical, if not illegal, to charge tax on tax.

Does anybody know if it is illegal, because if it is, wouldn't it be nice to be able to claim back all the excess VAT for 6 years like the banks, building societies etc have had to do on their overcharging.

That might get rid of Gordon Brown for sure then.

anewman

If it was illegal it wouldn't happen. The tax on the tax is part of the reason it's good for the Government to increase fuel taxes. Although when you put it as simple as the Governments approach is to "tax your tax" then it does sound somewhat questionable. But it's gone on for many years and will go on for many more.

JohnM14

Thanks for your interest

Are you telling me that the government never make mistakes? Just look at Iraq, that wasn't legal either in my opinion. Just because it has gone on for many years doesn't make it legal.

I am seeking a legal answer - hopefully from a VAT expert.

Hintza

John there will be 1,000s of drivers and hauliers out there that would have been in court by now to challenge it if there was a case to be made.

But I agree with you!!

Wig

I agree it is unethical, as to it being illegal, I dunno, I don't think it would be illegal, except maybe under some European directive which we are not aware of. Or some ancient medieval law.

I think also you have your figures wrong it's not 90% tax more like 78%

goldspanners

totally agree with you john,why do we need to pay a massive tax and then VAT on top of it all.
not as much as you say is tax but at least 60 - 70 pence per litre is now tax,with another expected increase of 2 pence soon.
soon you will have the tree huggers on here telling us its wrong blah,blah,blah,but the government cant keep uping the tax on fuel at this rate.the country will come to a standstill shortly if it does.
this shouldnt be about the drivers using less or driving everywhere at 56MPH, it should be about clean fuels or alternative fuels that dont pollute our atmosphere,the technology is there but we are not using it,its just another part of rip off britain.
everyone should be able to see this even our tree huggers.

JohnM14

We are not able to know the exact fuel tax so maybe my figure may be slightly wrong. The question is: Is it legal to put VAT on tax? Just because it has been going on for years - doesn't make it legal. I always thought VAT was for a service given to the buyer. The banks, financial institutions overcharge illegally - so why not the government.

The trouble with Great Britian is that we accept everything that is told to us without question. I am too old to fight anymore - the younger generation needs to wake up and resist and not accept all this being handed out all the time.

Would still love a VAT expert to explain

Ephemera

It might be because the duty on fuel is charged to the fuel company, and we get to pay it on the fuel total cost.
So yes, it looks like we do pay tax on tax.

But then again we do it on loads of other things too..if producers pay tax on raw materials and then add value by turning it into goods / shipping it to the point of sale, shops pay tax on the goods and we pay tax on the end product...tax on tax on tax??

Remembering we also get taxed on money we earn...if we save it we get taxed on the interest and then if we spend it after saving it we get taxed again.

It all seems so simple

(and I know I'm being facetious) :rotfl::rotfl::rotfl:

goldspanners

your right john us younger generation do need to do something about it,but the problem is not enough folk really care about it.

JohnM14

The act quoted is for: Importation of goods from outside the member States isn't it?

Is petrol not refined in this country?

Wig

IF you take cost of unleaded £1.06

The duty is 50.3p the VAT on the 50p is 17.5/2 8.75,

So the total is 59p duty & VAT

there is also the cost of the fuel and the VAT on that cost, 1.06 - 59p = 47p

47/1.175 = 40p

So you can break down the full cost like this

40p fuel cost, includes profit margin by retailers
7p VAT on fuel cost
50.3p duty
8.75p VAT on the duty (tax on tax)

Total £1.06
Total tax = 66p = 62%

The good news is that oil has dropped from $100 a barrel to $88 a barrel. The bad news is the petrol companies & then the retailers in turn are unlikely IMHO to drop their prices to the previous prices when oil was $88 - which was late Sept 2007 does anyone know what fuel cost was in late Sept early Oct 2007?