The Price of Fuel

The facts

So, the price of fuel has just gone up again. Everyone moans about the profits that the oil companies make. Sometimes there are campaigns for their substantial profits to be subject to “windfall” taxes.

 The truth is somewhat different. Based on a £1 per litre, the cost breaks down to roughly:

•  Fuel Duty at 43.35p
• VAT at 14.9p
• Oil company for refinery costs at 31.75p
• Forecourt costs at 3p
• Forecourt profit at 2p

 So that is 58.25p in tax. And add to this:

• Oil Company pays Corporation Tax on its profits at 30%.
• Oil Company pays PAYE and NI on salaries to its employees.
• Forecourt profit pays Corporation Tax on its profit at 30%

So shall we call these further taxes at about another 5p a litre? (I am probably being a little conservative)

 Add that lot up and taxes are a whopping 63p (at least) a litre. Or 63% of the price.