Since the Budget in March, the Treasury has already taken an estimated £820m more than its forecasts in North Sea oil tax. The £6bn of surplus revenue would easily cover the cost of U-turns on both fuel duty and vehicle excise duty, where ministers are introducing new bands which could cost an extra £200 for drivers of inefficient cars. Deferring the 2p increase in fuel duty by six months would cost £550m. Scrapping the revamped vehicle excise duty altogether would mean the loss of an estimated £465m next year and £735m next year – although ministers may only remove the retrospective element of this tax.
So scrapping the poll tax on wheels and the 2p hike on petrol taxes would cost about 9 weeks extra than forecast windfall taxes due to high oil prices. Scrap ‘em now…
The Co-operative Bank is calling in £2.61m in loans, Unity Trust Bank owned by the Co-op and the unions has a further £1.54 m due at the same time. In total £7.45m is due next month. Money that Labour simply does not have. Guido is willing to risk buying Labour Party debt at 10p in the £1…
The position of general secretary is still vacant. Guido is surprised.
The price differential between Britain and America is almost entirely due to taxation. Americans are enraged that they are paying $4 a gallon, they would probably have another revolution if they had to pay the equivalent of $12 a gallon as the British do. Even Europeans pay lower fuel taxes than the British, in some cases dramatically lower tax rates.
In the 2005 budget Gordon doubled the tax levy from 10% to 20% on oil explorers. At the time the Offshore Operators Association said it was “shocked” by the chancellor’s decision. “At a single stroke, the Treasury has rewritten the industry’s future. It will severely undermine business confidence,” warned the OOA chief executive, Malcolm Webb, “This has been done not once but twice in the space of just three years and we fear that this time the North Sea will not be as resilient.” And so it has proved.
Former oil trader Alan Duncan, the Tory Business Shadow, says Brown‘s actions over oil production are “not just laughable, but pitiful… he has completely lost the plot.” The government has belatedly today exempted 30 unprofitable oil fields from Petroleum Revenue Tax and granted licenses to two new sites. It was Gordon himself who doubled the Petroleum Revenue Tax three years ago.
What bemuses Guido most is that in the midst of all these difficulties, Alistair Darling is still dithering and doesn’t know if he wants to delay adding 2p a litre to fuel costs. He doesn’t know? He really doesn’t have a clue does he?
UPDATE : Osborne spotted the problem last year.
Gordon isn’t going to talk down the market, it will come down when the market believes recession will hit demand…
UPDATE : Larry Elliot, Guardian Economics editor reckons oil “has increased from $10 a barrel a decade ago to $135 today.” If he turns a few pages in his own paper he will see he is wrong.
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- the reasons for departing from the previous fiscal policy objectives and operating rules;
- the approach and period of time that the Government intends to take to return to the previous fiscal policy objectives and operating rules; and
- the fiscal policy objectives and operating rules that shall apply over this period
Well the government could honestly specify:
- We recklessly overspent in the good times and when things went wrong and we nationalised Northern Rock, we bust even the fiddled limits.
- We will probably carry on spending like a drunk sailor in port and leave the mess to George Osborne to sort out, just as Geoffrey Howe had to sort out our mess last time.
- We will just throw money at any electoral problem even though we seem to have run out of people and things to tax.
The penny has dropped for Denis MacShane of all people:
“the prime minister can announce that he will leave more money in the pockets of the British people by reducing their taxes. This can be targeted at the indigenous working class, furious at the incessant year-on-year council-tax increases above the rate of inflation… I do not know of a single minister who privately does not despair at the waste of money on pointless projects, publications, or legions of press officers that add no value.”
Welcome to economic reality Denis. When even former Labour Ministers are calling for tax and waste reductions the tax argument is won (without any help from the Cameroons).
Meanwhile, fresh from telling the banks to lend more mortgages at lower rates in defiance of LIBOR, Gordon is today going to tell the oil companies to drop prices in defiance of supply and demand. What is the point of Gordon’s market bucking fantasy rants? To get a photo op and show he is “doing something”, he will subsquently in interviews say that he told the oil companies to drop prices, just like he told OPEC to stop laughing at him. There is only one thing in his pwoer which will reduce petrol pump prices.
Given that some three quarters of the petrol price is tax, perhaps reducing the tax take on petrol would be the best way to help hard pressed voters. The Golden Rule is bust, we need economic growth. We can only boost the faltering economy if, as Dennis MacShane says, we “leave more money in the pockets of the British people by reducing their taxes”. You can’t buck the market Gordon, but you can borrow from the bond market…
.. and no – the source is not Drudge – a mid-level Hillary campaign source.