Vehicle Fuel Receipts (Transparency of Taxation)

Part of Oral Answers to Questions — Attorney-General – in the House of Commons at 1:29 pm on 16 October 2012.

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Photo of Robert Halfon Robert Halfon Conservative, Harlow 1:29, 16 October 2012

I beg to move,

That leave be given to bring in a Bill to make provision for receipts for vehicle fuel to display the amount of fuel duty paid and the amount of that duty to be spent on road building;
and for connected purposes.

Before I begin, Mr Speaker, I am grateful for your permission to mention that in Harlow on Monday there was a tragic fire in which four children and their mother lost their lives. I want to express my heartfelt condolences to their extended family and to their community and to thank the emergency services for all that they have done.

The principle of the Bill is very simple—that taxes should be clear to the people who pay them. At the moment, they are not. To their credit, the Government believe in transparency. As the Prime Minister has said,

“We want to be the most open and transparent Government in the world…With a presumption in favour of transparency”.

I am glad to say that this Government have moved towards a “right to data”, putting on to the internet information on Whitehall spending, as well as on ministerial meetings and procurement contracts. They are rightly supporting the idea of my hon. Friend Ben Gummer and giving taxpayers a statement of where their tax goes. These are important steps towards transparency.

Why not do that for fuel duty as well? After all, this Government believe in cheaper petrol. Ministers have done more to cut fuel duty in two years than the previous Government managed in 13. Petrol is now 10p cheaper than planned in Labour’s last Budget, but the problem is that fuel duty is still a stealth tax. At the moment, when we fill up our car our receipt says “Fuel £50, VAT £10”. This is wrong. If my receipt was accurate, it would say how much fuel duty I am paying, which is currently disguised in the price. It would say something more like: “Fuel £25, duty £25, VAT £10”. There should also be some mention of how much of that tax is spent on our roads.

I want to explain three things: first, that fuel duty was never meant to be a millstone around our necks; secondly, what I am proposing; and thirdly, why transparency works. The history of car taxation is a textbook case of how a tax becomes entrenched. First, it is temporary and hypothecated for a specific purpose, then it is expanded, and finally it is folded into general taxation. As I have set out to the House before, this is exactly what happened to fuel duty between 1909 and 1937. In the early years of the 20th century, funding for roads was drawn mainly from local ratepayers. The 1909 Budget put a new duty on motor spirit—that is, petrol—but it was ring-fenced for a road improvement fund, and David Lloyd George promised that it would always be devoted exclusively to the roads. However, through the 1920s the road fund was repeatedly raided to prop up the Treasury, and from 1937 it was treated as a general tax.

By 1966, the result was that just one third of the revenue was actually spent on roads; by 2008, it was just one fifth. The proportion being spent on roads has shrunk hugely, but at the same time fuel duty has risen. Over the years, a series of temporary increases were brought in. The fuel duty escalator began in 1956 with the Hydrocarbon Oil Duties (Temporary Increase) Act 1956. At that time, duty was fluctuating between 5p and 6p a litre, and VAT did not exist because we had not yet joined the European Community. The temporary increase was a mirage. Fuel duty is now 58p, with 20% VAT on top—an increase of more than 1,000%. My argument is that on every receipt of every fuel bill the tax burden should be clear and transparent, and there should be some indication of how much is being spent on our roads. So my receipt would say: “Fuel £25, duty £25, VAT £10, amount spent on roads approximately £7”.

This campaign has been supported by FairFuelUK, which has gained 15,000 signatures on a petition specifically on this issue, and hugely by the TaxPayers Alliance, which has put leaflets out on forecourts around the country, as well as by the independent fuel retailers, led by Brian Madderson.

Some Treasury officials may be sceptical about this Bill. “Isn’t this up to the retailers?”, says Sir Humphrey. To them I say that the Government have complex rules about what one can and cannot put on a receipt, especially if VAT is involved. On Her Majesty’s Revenue and Customs’ website, there is a 15-bullet-point list of what precisely a VAT receipt must show. The point of my Bill is to bake transparency into the system, to give clarity to retailers, and to make it standard across the whole country. That is something that only a Bill could easily achieve.

Why is this necessary? First, we need to be honest with motorists. The average family in my constituency of Harlow spend a tenth of their income on fuel—more than they spend on the weekly shop. In essence, they are facing petrol and diesel poverty, and morally they have a right to know why their bills are so high. Secondly, tax transparency would act as a deterrent to stop any future Government hiking fuel duty without good reason, because people will see the increase on their receipts. Thirdly, it would make it easier to hold the big oil companies to account. The Government say that their actions have a low impact compared with huge swings in the oil price. My proposal would give people the hard evidence, on a weekly basis, to know that falls in the oil price are being passed on to consumers, as campaigned for by As an aside, I should say that earlier today I, and many colleagues, met Clive Maxwell of the Office of Fair Trading. I am glad that he is now looking very carefully at the petrol and diesel market and will report in January.

This proposal would be a small step towards the kind of white van Conservatism that the Prime Minister talked about in his conference speech. At least those of us on these Benches are all white van Conservatives now. It might even help to make the case for ditching Labour’s 3p rise in fuel duty, which this Government have so far delayed to January 2013. I urge Front Benchers to delay the rise further, because too many people are still suffering from the high cost of petrol and diesel.

This is a simple Bill that does what it says on the tin. It would give us basic transparency on fuel duty, about what people pay, and where the money goes. It would make the system more honest, act as a deterrent against tax rises, and add pressure on the oil companies to be fair. I hope that the whole House will support it.

Question put and agreed to.


That Robert Halfon, Martin Vickers, Jason McCartney, Anne Marie Morris, Caroline Nokes, Nick de Bois, Jim Shannon, Mr Angus Brendan MacNeil, Nadine Dorries, Charlie Elphicke and Marcus Jones present the Bill.

Robert Halfon accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 30 November and to be printed (Bill 72).