Too many taxes are buried in prices. From Value Added Tax to the cost of extravagant subsidies for renewable energy, all people see is the shop charging them a higher price. That is convenient for politicians trying to hike our taxes, but it distorts democratic decisions over the level of taxes and spending, and which taxes to increase and decrease.
That is why we have seen steady increases in Employers’ National Insurance. It is why climate regulations are structured so a huge part of the cost is buried in the electricity market. And it is telling that the taxes people resent most are the lump sums they have to write a cheque for each year.
Making the tax system transparent is therefore the right objective for anyone who believes in a more honest, competitive and efficient tax system. The 2020 Tax Commission recommended abolishing National Insurance partly because it would reduce administrative costs and make for more efficient taxes, but also so it would end the fiction that low paid workers pay a 20 per cent basic rate and make for more honest taxes.
But we at the TaxPayers’ Alliance are doing more than just arguing for more transparent taxes: we are doing something about it. That is why today we have released new fuel tax stands, which have been sent to more than 5,000 independent petrol forecourts across the country.
They show how around 60 per cent of the price of petrol is tax. Or how, when someone pays £30 at the pump, £18 is going to the Government with just £12 to cover the entire cost of the fuel itself – and under £1 of that going to the retailer. It is politicians who are primarily responsible for the high price of petrol, and greater transparency will mean it is a lot harder for them to make excuses for imposing a huge burden on motorists.
Today we’re also giving hard-pressed motorists the opportunity to make their feelings clear to those in power about the level of tax on fuel. If you go to www.FreezeFuelTax.com, you can fire off a letter to your local MP asking them to support our campaign to scrap the rises in fuel duty planned for next year.
The more people are aware of just how much the Government takes in fuel tax, the harder it will be for ministers to increase it any further.
Matthew Sinclair is Chief Executive of the TaxPayers’ AllianceTags: 2020 Tax Commission, Fuel duty, Tax reform, Taxpayers' Alliance, UK politics, Vat