UK firms struggling with highest pump price worldwide
The study by UHY Hacker Young chartered accountants found that that the UK levies taxes of 59% on diesel, which is the highest in any major economy, and 60% on petrol – the third highest. This is considerably more than other major developed economies such as the United States, Canada and Australia.
This means that the cost of filling the tank of a Ford Transit van with diesel in the UK amounts to £108.74, while the cost of a tank of petrol is £106.38.
In comparison, both of the world’s largest economies, the United States and China, have extremely low fuel taxes. The United States levies just 13% on petrol and 12% on diesel, whereas China levies no taxes at all on these fuels.
The firm says that while governments which levy higher petrol taxes say they are important in cutting greenhouse gas emissions, the transport lobby and SMEs argue that they add costs for all businesses.
Even for Liquefied Petroleum Gas, the UK still levies taxes of 60%, the highest tax on LPG in the developed world by some distance, and contributing to the third highest LPG costs in the world.
UHY Hacker Young added that this study is a reminder that all advanced economies must make continued efforts to maintain tight control on the levels of business taxation, especially as the recovery from recession starts to gather pace.
Roy Maugham, tax partner, said: ‘Taxes on fuel are an area in which the UK is placing a bigger burden on businesses than in many other countries, which could act as a brake on the speed of recovery from the recession.’
‘Naturally, the UK wants to sustain its record on reducing carbon emissions, but fuel taxes are not the only way to achieve that – measures like more attractive capital allowances for energy efficient technologies are a positive way to incentivise businesses to reduce their carbon output.’
‘While the British Government’s cuts to corporation tax are certainly popular with businesses, the 60% tax on petrol is still a considerable burden for them to carry, particularly as reclaiming the VAT element can be complex, especially for smaller businesses.’
‘Scrapping the fuel tax escalator and pledging to keep a lid on fuel duty increases in the last few years may have saved businesses from even higher costs but we still have some of the most expensive pump prices in the world.’
He added: ‘The United States is already quite a distance ahead of the UK in its economic recovery, and its lower levels of taxation in areas like fuel may well be helping to stimulate growth.’
‘The Government’s recent study on the benefits of keeping fuel duty in check is a very encouraging suggestion that it intends to cut tax in the future, but businesses are eager to hear when that ambition will be turned into action.’
‘Reduced taxes on diesel would be particularly advantageous for fast-growing small and medium businesses that run fleets of commercial vehicles, especially in sectors like distribution and retail. These businesses can be key drivers of economic recovery.’
‘Lowering taxes on LPG could also be achieved without upsetting the green lobby, and might help to increase use of the fuel to the kind of levels seen in the USA and Australia where it is significantly cheaper.’