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In the UK at the present time, we’re having a lot of protests on the price of fuel.  I’ve spent the last hour or so trying to sort a few facts out of the high emotions.

I started by using Google to see if I could find out how much revenue the Government takes from fuel.  No-one seems to put the facts down in a set of simple facts that this lady can understand.  I suppose it’s in the Government’s interest to keep things quiet and in those that oppose the price rise to keep the emotions running as high as they can.

Why let a few facts spoil a good argument?

What you pay for fuel in the UK, is made up of three parts; the cost of the fuel itself, the duty imposed and then VAT on top of that.

I started by downloading the Annual Report for HM Revenue and Customs for 2006-2007.  This is actually quite a simple Excel spreadsheet that is worthwhile reading if you want to see how the Government gets some of its revenue. 

As an aside here, why don’t they publish a simple Profit and Loss statement like any company has to?

In this report on page K4, they have this graph which shows the various road fuels used in the UK.

You can see how much petrol and diesel we use, but also that the total amount seems to have stayed remarkably stable at about 48 billion litres.

If I look at a VAT receipt for fuel, then it would appear that if you’re buying fuel at 100 pence a litre, then the total VAT take is £7.1b. At 125 pence it’s £8.9b and at 150 pence it’s £10.7b.  I’ve been a bit simplistic here, as I’ve assumed that petrol and diesel have similar prices, which at the present time they don’t.

So it’s in the Government’s interest for fuel prices to rise.

Incidentally the 2p on duty will raise just under a billion pounds.

So if I was the Chancellor what would I do?

I’d raise fuel duties and take all of the revenue and use it to raise tax thresholds, benefits and state pensions. I’d also charge foreign lorries a carnet, every time they entered the UK to create a level playing field for haulage companies.