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A Taxing Issue

08 October, 2007
Could Gordon Brown's recent 2p tax hike on fuel lead to a return of petrol protests and blockades?
Page 10 
Filling up at the pumps has got a lot more painful recently. With the price of a litre of fuel topping the £1 mark at forecourts up and down the country, motorists' hackles have been rising. Gordon Brown's 2p tax hike has stirred up a real hornets' nest,
with industry experts debating whether we could be heading for a return to the fuel protests and blockades that caused havoc in 2000.Some opponents of the tax accuse the Prime Minister of reintroducing, by stealth, the controversial 'fuel duty escalator', or automatic increases in fuel prices.And there is worse to come - a further increase of 2p per litre is planned for next April, with another 1.84p on the cards for April 2009. Industry figures warn there could be a winter of discontent ahead for Brown as the reality of the move hits home.Roger King, chief executive of the Road Haulage Association, feels the price increases could be one step too far.He said: "The industry is very disillusioned and feels let down by the government. The fuel tax rise is totally unjustified and I'd say that the same feeling probably exists now as it did in 2000."But who knows if there will be any blockades or protests. We're not aware of any, but if there were any blockades they would have to be spontaneous. If all this spills over into action, then so be it."King's main gripe is that the 2p increase gives European freight drivers an unfair advantage over those in the UK."This will only encourage foreign haulage firms to come over here," he said. "They can access the roads for free and refuel more cheaply on the continent."It's not a very level playing field for business, is it?"King is writing to MPs to argue his point - he wants the 2p tax to be rebated to the industry."I expect the Government is seeing if it can get away with this without any demonstrations. We need to think about how we can embarrass them."But a blockade might not be as straightforward in 2007 as it was back in 2000. The law has changed, it would be almost impossible to turn up and cause blockades at the oil refineries."The police have the power to remove the vehicles. Seven years ago the protests were treated almost as a trade union thing."But that would not be the case now. Some of the people involved in the 2000 protests have got out of the business - but some are still around. And a few are asking what they can do to fight this. It will be interesting to see what happens."The RHA has pointed out that the 2p rise means fuel duty on the price of a litre of diesel in the UK now stands at 50.25p. This compares with an average for the rest of Europe of 22.7p a litre.And the AA has pointed out that the average UK motorist now pays an extra £4.84 to fill up their tank than they did just a year ago.Meanwhile, the Petrol Retailers' Association (PRA) has warned that fuel prices could hit record levels this winter. And of course the smaller petrol stations will be hit the hardest.PRA chairman Peter Brough said: "We think the current tax increase should have been deferred. Firstly because the increase is just too great, but secondly because prices in general are going up."If oil prices were falling, then okay, but prices are rising. The Government needs to re-think its policies, and fast." Peter hadn't heard any blockade rumours, but is not opposed to fresh protests.He added: "If there is going to be a blockade then it should be inside the M25. Then it hits the MPs - if they can't buy petrol maybe they'll have to start listening."When the fuel duty increase was brought in on October 1, oil giant BP was the first petrol retailer to confirm it would immediately pass on the cost to consumers.Many of its rivals, including some supermarkets, said their prices would remain "competitive".A BP representative said: "Every company has its own policies on this. We put the duty on but remained relatively competitive with our prices. This is a government increase, not our increase."The company wasn't aware of customers complaining about the rise at the forecourt tills - but the objections have been gathering momentum elsewhere.At [http://www.petrolprices.com], a website which compares petrol prices around the country, motorists have been voting on what they think of the PM's move.Last Wednesday, 89% of users had voted to say they wanted to see a u-turn on the policy. The site's co-founder, Brendan McLoughlin, has written to the government about the main issues involved.He is waiting for a response before following up with more action. McLoughlin said: "People are really annoyed that the fuel tax itself isn't directly linked to transport - the money goes into the central pot for services like schools. Even people who don't object to paying more tax find this frustrating. Drivers want to see more accountability for where the fuel duty is spent and I think they deserve that. It seems the motorist is always being punished."Also, it's really bad timing. This time last year a litre of fuel was in the 87p range. Now it's 10p higher and they're still planning on adding on more tax. "The government is already benefiting from the increased VAT on that 10p rise, do they really need to add this extra duty?"And it looks like oil prices are still going up. With so many PetrolPrices.com users, hopefully the government will have no choice but to sit up and take notice."Jonathan James, co-owner of Cambridgeshire-based independent James Graven & Sons, said customers were filling up on petrol - in behaviour similar to "panic buying" - in the week leading up to the increase. So much so, he saw volume sales pushed up by 10-15%.But while motorists have been moaning in James's garage stores about the price rises, he is relieved they are putting the blame squarely on the shoulders of the government and not the retailers.Jonathan added on the extra 2p tax to his fuel on October 1 - even though it pushed his prices above £1 a litre for the first time for unleaded and diesel.He says: "I didn't even think about trying to absorb the extra tax myself - we put our prices up straight away. Some retailers were worried about it but this is a government tax. There's no way I'm doing that just to try to extend Gordon Brown's honeymoon period."----=== The blockades of 2000 ===Back in the summer of 2000, petrol costs were soaring.The Conservatives got the opposition going by urging motorists to 'dump the pump' and boycott forecourts on August 1.On September 5 the major oil companies warned that an increase in the price of crude oil meant petrol prices would also rise.The following day the fuel protests which had been crippling France reached the UK.A number of lorries made their way to the British side of the Channel Tunnel and blockaded the entrance, causing major delays on the M20.The protest quickly gathered widespread public support from angry motorists around the country.The next day more lorry drivers blockaded the Stanlow Shell oil refinery near Ellesmere Port in Cheshire as well as the Hertfordshire Oil Storage Terminal.The protesters - mainly hauliers and farmers - believed that the oil companies were not passing on crude oil price cuts to consumers.There were also angry over the government's Fuel Price Escalator policy - which automatically increased fuel tax ahead of inflation.With petrol prices in the UK more expensive than in the rest of Europe, protesters stated it was impossible for the British haulage industry to remain competitive.By September 10 the protests were gaining momentum, and six of the eight major oil refineries around the country had been blockaded.While the protesters did not actively stop tankers leaving the refineries, some drivers were reluctant to cross unofficial picket lines.Supermarkets, hospitals and petrol stations were all unable to get fuel deliveries, and food and petrol rationing became widespread. Meanwhile 'go slow' lorry protests were organised, blocking motorways.Motorists responded by starting to panic-buy fuel.By September 12, one third of all petrol stations in the UK were reported to have run out of fuel, and Tony Blair met oil chiefs in London.That evening, Blair announced that the blockades were being cleared and things would be back to normal by the morning.On September 14, with a heavy police presence to protect the lorry drivers and a shift in public opinion, the blockades came to an end.