Petrol tax take now 70%12 Jan 2015

Chancellor takes biggest share of pump price since 2009

Seventy percent of the price of unleaded petrol now goes to the chancellor in tax.

This is the highest proportion for almost six years.

With the average petrol price standing at 109.6p a litre the Treasury now receives 76.25p (70%) of this in taxation.

The current pump price of petrol is made up of:

  • Fuel duty – 57.95p (53%)
  • VAT: which is levied at 20% on both the product price and fuel duty – 18.3p (16%)
  • Wholesale price: including oil production and refining – 23p (21%)
  • Delivery and distribution – 1.9p (2%)
  • Retail margin: including forecourt costs and retailer profit – 8.5p (8%)

For diesel, the total tax take is 66%.

Because fuel duty is set at a flat rate and makes up the bulk of fuel taxation, the Chancellor is able to rely on his tax income from fuel remaining quite steady even as the underlying price of petrol and diesel falls.

Professor Stephen Glaister, director of the RAC Foundation, said:

“An astonishing 70p in every pound we spend at the pumps is now destined for government.

“Last week the Chancellor again publicly urged fuel companies to pass on oil price reductions to motorists. Clearly he thinks the price of fuel is still too high. Well he has an easy solution. Cut duty further.

“We estimate that collectively UK drivers are £330 million better off each month compared with last summer because of price reductions at the pumps. Yet they could be better off still, and have more money to spend on the high street, if the Chancellor revised downwards the huge proportion of tax he takes from motorists and hauliers.

“It is fair that drivers should cover the costs they impose on society through things like road accidents, carbon emissions and poor air quality, but we have never had any precise calculation as to how these costs relate to the level of fuel duty.

“These numbers will reinforce in many drivers’ minds the idea that the current system of fuel taxation is disproportionate and simply about raising as much cash as possible.”



Philip Gomm – Head of External Communications – RAC Foundation

[email protected] | 020 7747 3445 | 07711 776448 | 020 7389 0601 (ISDN)

Notes to editors:

The RAC Foundation is a transport policy and research organisation that explores the economic, mobility, safety and environmental issues relating to roads and their users. The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist.

The RAC Foundation is a registered charity, number 1002705.

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