Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

A Vexation On Taxation

18 February 2015

Taxation is great value for money.  So says anyone looking for an argument.  The percentage of tax take versus services provided is probably not the way to start a convivial conversation.  

None of us would argue with less taxation, that’s a given.  So long as we still felt our obligations to the community at large were being met, we would all welcome a little less of that funding coming from our own pockets.  However, it’s all those things that don’t directly affect us in our daily lives that the Chancellor is obliged to fund, that puts the tension in the link between funding our society and the burden of paying for it all.  It’s a tough call, and, of course, we all have every sympathy with the Chancellor of the day as they make those tough decisions. Yeah, right.

We’ll be especially sympathetic when we’re filling up the car as we all know that the bulk of the cash paid at the pump is pumped straight into the Exchequer’s coffers.  It’s a known fact that  filling station owners take more profit from the chocolate bar you pick up on a whim than the tank full of petrol.  Fuel duty is the most famous example of taxation hitting the weekly household budget harder than everything else put together.    Indeed, according to Wood Mackenzie research, only about a third of the fuel price is directly attributed to the commercial transaction, hence the annoying situation of a huge drop in raw material costs translating into a minimal drop in retail prices.

It’s not just petrol and diesel.  Some might argue an even more important fluid is yet more heavily taxed.  Four fifths of every measure of Scotch whisky is the not-so-angelic share taken in taxes.  The industry recently met with the Treasury to seek a modest reduction, but, even if successful, that’s unlikely to yield a big drop at the off-licence counter.

Fuel and spirits duties may make up a small percentage of the overall tax take for the Exchequer, but it seems their impact on national sentiment is far greater than even a minimal rise in easily perceived taxes - Income Tax and VAT for example. 

Questioning the value of taxation is nothing new either.  Giving the taxpayer value for money has been a political tool for as long as there has been tax and politics.  Now, we’re asking more closely than ever if we are getting value for money from our collective contributions to the public purse.  That’s always going to be an open ended debate, but the inequity of the burden in certain sectors - be that fuel, spirits, or a host of other indirect taxes - will always cause ire and discomfort. 

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