Monday, 28 February 2011

Fuel Tax in the UK

Fuel tax in the UK has constantly changed over the last decade and has risen steadily over the last 15 years. From 1993 to 1999 there was a rapid increase with duties on fuel consistently increasing by above annualised rate of inflation. This was as a result of a major change in petrol taxation in 1993 when the government of the time introduced the Fuel Price 'escalator'. This was legitimised as a way of the government helping to protect the environment by discouraging people from using their cars. Naturally, it produced a new source of revenue for the government in the process.
The fuel escalator forced prices to rise from one of the lowest in Europe to now, certainly one of the most expensive. When it was first introduced fuel prices rose by 3 pence a litre and tax contributed to 72.8% of the total cost. By 1997, just four years, the escalator had added 11.1p to the cost of unleaded petrol and was at 75%.

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