Memorandum submitted by Total Fina Elf
As a prelude to the oral evidence that we are
to give to the Committee regarding the impact on trade and industry
of motor fuel taxation, it was indicated that the Committee would
welcome written memoranda. Total Fina Elf offers the following
facts for consideration by the Committee.
THE UK THAN
The attached table shows the comparison of duty
levels for Petrol and Road Diesel covering 14 European countries.
The figures are stated in Euro per cubic metre for both products.
The table shows that:
The UK has the highest duty level
for both products of all the European countries.
For Petrol, the UK duty difference
ranges from c.135-280 per cent of the other European countries.
For Road Diesel, the UK duty difference
ranges from 210 per cent to 330 per cent of the other Countries.
In the UK, the duty is charged on the motor
fuels as the fuels leave the refinery (ie refinery gate) on its
way to the terminals. Payment terms are on average approximately
30 days. This contrasts with the European practice where oil duty
is typically charged as it leaves the final terminal delivery
point with payment terms similar to that in the UK. This difference
in duty collection point is significant and impacts the final
cost of product because:
Due to the time it takes to transport
the oil from the refinery to the terminal and also the time the
oil remains in terminal stock prior to delivery to road tanker,
the payment in the UK is made up to c.15 days before that in Europe.
The oil is transported between the
refinery and terminal in the UK with duty paid therefore any physical
hydrocarbon losses during transit and terminalling are also duty
paid. This actually discourages stockholding in the UK outside
the refineries at both terminals and service stations.
In addition, the UK duty point applies
to motor fuels refined in the UK. Imported motor fuels can be
brought directly into some product terminals "under bond"
with the duty deferred until the product leaves the terminal.
Because the downstream business of Total Fina
Elf in the UK is to refine, distribute and market petroleum products
to mostly inland UK markets, it is difficult for us to comment
on the relative impact of the UK motor fuel taxation policy on
our sector. It is also difficult to judge the price sensitivity
and elasticity relative to the other European markets as there
are many other factors at play. For these reasons, our comments
above should not be viewed as arguments for or against the current
level of motor fuel taxation but just some factual information
about the UK motor fuels duty policies relative to the other European
countries. We respect government's right to tax. We also realise
that all governments are supported through various forms of taxation
so it is difficult to analyse one segment without a comprehensive
review of the whole. We hope the Committee finds these facts useful.
24 October 2000
COMPARISON OF EUROPEAN DUTY RATES1 (EXCLUDING
||Petrol (Unleaded 95 Octane)
|1 Source: OPAL (October 2000).
2 Equivalent to 48.82 ppl.