Posted on 09/26/2003 5:23:54 AM PDT by sr4402
London (CNSNews.com) - The British government has announced it will go through with a planned fuel tax increase despite a recent OPEC decision that has pushed the price of oil higher on world markets.
The country's leading motorists' group, the Automobile Association (AA), warned that the hike was ill-timed and could lead to scenes of civil disorder akin to those seen during tax protests in 2000.
Government officials say the increase totaling more than 10 cents per gallon is in line with inflation.
The hike was initially proposed during the announcement of the government's annual budget in April, but was delayed at the time because of volatility in the world market, due largely to the Iraq war.
"Since the budget, the uncertainty for other regional oil-producing nations (outside Iraq) has lessened," the U.K. Treasury said in a statement Thursday. "The volatility of oil prices at the time of the budget has now diminished and oil prices have become more stable."
The Treasury also pointed out that since 2001, fuel taxes have declined by 13 percent on an inflation-adjusted basis.
Critics say the danger of oil market volatility isn't over, however.
On Wednesday, the Organization of the Petroleum Exporting Countries, anticipating greater output from Iraq, decided to cut the production by 900,000 barrels a day in November. Oil prices subsequently rose on world markets.
The AA said the time wasn't right for British fuel tax increases.
"We're not happy with the government's decision," said AA spokesman Richard Freeman. "From our perspective, that danger (oil price volatility) hasn't gone away."
"U.K. fuel prices are among the highest in Europe," he said. "With this increase, petrol will be dangerously close to the 80 pence per liter mark."
That level, equivalent to about $6.04 per gallon, was described by Freeman as a "psychological barrier" for British consumers.
AA statistics show the current average price for unleaded fuel is $5.78 per gallon, with diesel fuel slightly higher. More than 70 percent of the price of a gallon of fuel is made up of tax, according to the association's figures.
The protests in 2000 by a rag-tag group of truckers and farmers paralyzed the nation for a week and prompted Prime Minister Tony Blair to threaten calling out the armed forces to remove blockades around major oil refineries.
An estimated 90 percent of the country's gas stations ran dry before the protest was called off.
At the time, regular gasoline prices were about 85 pence per liter, or more than $6.40 per gallon at today's exchange rates, the AA said. Freeman warned that calls for protests could be renewed if prices climb much higher.
The new levy will come into effect on Oct. 1, and Freeman said the AA was requesting a tax freeze.
"It's not realistic to expect a price cut," he said. "The government relies too much on fuel duties for revenue."
"What we would like to see is a freezing of the tax," he said.
The Conservative Party also attacked the hike, saying it would hit living standards.
"At the time of the budget, (Treasury Secretary) Gordon Brown said he was postponing the increase in petrol tax because oil prices were 'high and volatile,'" Conservative treasury spokesman Michael Howard said in a statement. "The oil price is now higher than on the day of the budget."
"The government is taxing, spending and failing," Howard said.
Environmental groups, on the other hand, welcomed the tax increase.
"Higher fuel prices help cut congestion and pollution by encouraging drivers to buy more efficient cars and use them more sensibly," said Tony Bosworth of Friends of the Earth. "But money raised should be used to fund public transport improvements and alternatives to the car.
The group said that costs of car ownership have fallen in inflation-adjusted terms over the past 25 years.
"As world oil prices are expected to fall slowly, the Chancellor (Treasury Secretary) is right to increase duties to reflect inflation. If he didn't do this, lower fuel prices would just create more congestion and pollution," Bosworth said.
(Excerpt) Read more at cnsnews.com ...
Guess what is going to happen when the increase the UK Fuel tax yet again?
A: More revenue for the British Government
B: Less revenue for the British Government
C: Nothing at all
(Solve all problems.)
/sarcasm
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