Monday, 1 October 2007

Gordon Brown. His hand - in your pocket.

The PM Gordon Brown is on target to personally drive UK petrol prices to record levels.

A delayed tax hike he introduced on fuel in this year’s budget, when he was still chancellor, is due to bite next week. It is likely to push the average price of a litre of unleaded petrol to 98p. These levels are astronomical compared to the European average.

But wait – there is more good news. Lurking like a terrorists second bomb is a further little present. In that same budget he lined up yet another 2p fuel tax hike for next April. Plus yet another tax hike the following year.

The gift that keeps on giving.

Don’t forget - that is before you allow for the effects of VAT (Value Added Tax). You get to pay VAT on the tax that you pay for fuel.

On the face of it this looks like yet another instance of NU-Lab’s trick of gradual and preferably initially limited, hits designed to limit opposition to unpopular measures. Broon will have been anxious to avoid a repeat of the popular and widespread fuel price protests of 2000.

This little fillip to inflation will in turn work it’s way via road transport costs into the cost of almost everything we eat, drink and use. It may also go on to help drive higher interest rates.

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