VAT CUT CANNOT MASK FUEL DUTY RISE - ÖPIK (Montgomeryshire Liberal Democrats)

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Montgomeryshire Liberal Democrats <montlibdems@gmail.com>

VAT CUT CANNOT MASK FUEL DUTY RISE - ÖPIK

December 4, 2008 10:16 AM

During the Commons debate on the Queen's Speech yesterday, Lembit Öpik, Liberal Democrat MP for Montgomeryshire, spoke up on behalf of small and medium sized businesses affected by the increase in fuel duty.

A number of companies in Montgomeryshire will be affected by this increase, including Humphreys & Foulkes, which will effectively negate the Government's cut in VAT.

During the debate over the Government's recent fiscal interventions he said:

"I agree with some of those policies, because they are eminently sensible, but does the hon. Gentleman accept that the reduction in VAT is offset for small and medium-sized businesses, especially those involving transport, by the increase in fuel duty? In fact, what was given with one hand has been taken away by the other. Unless fuel duty is reduced, the long-term effect of that will be a net increase in the cost of fuel, which will have a devastating effect in constituencies such as mine."

Commenting afterwards, he added:

"V.A.T. has been reduced by 2.5%. But it's a cheat because fuel duty has been increased by 2.5%! So I and every other citizen will be paying the same for fuel as we did before the tax change.

"However the real losers are V.A.T. registered businesses. They're going to pay MORE, because there's been a 2.5% increase in fuel duty. They didn't pay the V.A.T. in the first place, so this is a tax increase. In other words, the Government will be getting MORE tax revenue from fuel, not less. And the extra's coming from the very small businesses and transport companies the government was implying it was trying to protect. Few people have spotted this scheme, and so they've got it "under the radar." But all businesses will feel the difference soon enough. It would be better for a more transparent approach, because this sort of spin only makes people cynical about the whole process."

Ends/diwedd

Notes to the Editor:

For a full account of the debate please visit: http://pubs1.tso.parliament.uk/pa/cm200809/cmhansrd/cm081203/debtext/81203-0008.htm