Fast Facts: Budget 2011 and your pocket

23 March 2011

budgetcutsWell, after some coughing, some laughing, the death of an old woman* and some accusations of “Del Boy economics” the annual Budget is over for another year. It was a whirl, folks.

But you are probably less interested in the economic theory behind the proposals, and more interested in the economic effect on your pocket. And being avid BitterWallet readers, I am guessing beer, fags and petrol are top of your concern list. Well, there’s good news and bad news.

Beer and Fags

Politicians are slippery sausages** aren’t they? George proudly proclaimed that “I have no further changes to announce to the rates of alcohol duty”, meaning the previously announced increase to beer duties will go ahead. Never mind.

In addition, the new rates of duty on high and low strength beer have been confirmed and will take effect on 1 October 2011. The rate of duty on low strength (between 1.2% and 2.8% abv) will be 50% of the general duty, meaning a saving of about 18p per pint, but likely to be of more interest to you lot is that a 500ml can of super strength beer (over 7.5% abv) will cost 25p more. Presumably beer with abv of less than 1.2% is too piss-poor to actually count as beer...

And it gets worse. Smokers will now be paying duty at a composite rate of 16.5% of retail price plus £3.10 per pack of 20, with this second element going up if there are more than 20 fags in a packet. They are targeting those cheap 25 pack ones, you see. In actual terms, a normal ‘premium’ pack of cigarettes will go up by 33p and an ‘economy’ pack will go up by 50p.

But there is good news

Well ish. The first point is that fuel duty is actually going to go down by 1p per litre from 6pm tonight. Do not visit your petrol station until 6.01pm. While anything that involves a tax or levy going down is a good thing, as the Opposition are at pains to point out, the January increase in VAT actually added 3p to the average litre, meaning we are still 2p down on the deal so far this year.

George has also scrapped the fuel escalator introduced by the previous Government, which had plans to increase fuel duty over and above inflation over the next few years. Or at least he has sort of scrapped it.

The reduction in fuel duty will be paid for by a fair fuel stabiliser, an extra 12% being added to tax on oil companies profits. No one (except perhaps the oil companies) is going to argue with that. However, if the price per barrel falls below $75, then the tax on the oil companies will be reduced.

But following tonight’s 1p cut, the rate will increase by 3.02p per litre on 1 January 2012 and “the 2012-13 increase in fuel duty will be implemented on 1 August 2012”. Until the draft legislation is published (due 31 March), it is not clear whether this means the increase in pence per litre will be implemented (1 percent plus inflation), or whether the rate of duty will be increased to the total rate previously announced for 2012/13. Or perhaps I am just being cynical.

The official Treasury document suggests that “a typical Ford Focus driver will be £56 better off in 2011-12 as a result of the measures announced in Budget 11.” Shame he will still be driving a Ford Focus though.

Finally, you may remember me mentioning low value consignment relief a little while ago. The Government have taken decisive action. The limit at which LVCR applies will be reduced to £15 (from £18) with effect from 1 November 2011, and a ‘consultation’ with the European Commission will commence immediately thereafter. Amazon and Play.com must be quaking in their boots...

*news of Elizabeth Taylor’s demise hit Twitter while the Budget was going on. I don't think that was how she died though.

** replace ‘sausages’ with your choice of descriptive expletive.

TOPICS:   Tax   Restaurants   Government   Motoring

10 comments

  • Frank
    Just heard from a mate in the field that Gaddafi, has been taken out by special forces in a raid 30 mins ago You heard it here 1st That should help with the budget for next year
  • Russ
    Booze - good idea Fags - too little increase Fuel - Not good enough Small Packets- about right
  • klingelton
    wonder if this will be enough to stop smokers smoking, my thoughts are - no.
  • Richard
    The fuel change really is pointless. Fuel prices fluctuate by 1p daily, and in my town the fuel prices are often different by 1 or 2p between pumps 100 yards apart :-P. Not saying they have to lower it further as I know the defecit has to be funded but if you're going to lower it then n=make it worthwhile.
  • Tim
    LVCR is bad news for the consumer. Prices will go up to accommodate the VAT they will now have to pay. Also does this affect the limit for personal postal imports, which is likewise no duty/VAT on items (with shipping) below £18 ? That would have quite an impact on those of us who import DVDs and Blu Rays from US.
  • Yue
    @Tim, ha! And I was berated for buying my no name multiregion blu-ray player. Things is it means I'll just stop buying stuff that isn't a reasonable price. Hitting Play and Amazon just kills jobs and sales, no chance they'll go after the real tax avoiders.
  • Yue
    Turns out though that corporations to get a tax cut that's ten times larger than that for the average taxpayer.
  • Phil
    Do the government seriously think that by reducing the litre of petrol by just 1p is going to fix the squeeze on an average families budget?? The government seriously do need to get a grip with the fact that anything over £1.00 a litre at the pumps is unnafordable to the consumer. Unless prices drop considerably at the pump then consumer spending elsewhere on the high streets will be a thing of the past! So much for the governments so called recovery if consumers can't spend elsewhere because of the current average of £1.32 a litre to fill up remains in place. People will still be priced off the road and therefore less tax revenues in pump prices and road tax will be collected by the chancellor. Lets all remember of course that even if prices do come down this year at the pumps then we can all look forward to the double whammy rise in fuel duty in 2012 which the government will shamefully go ahead with in January and August of next year. I think we can all agree that the war on the motorist is far from over and that no matter who is in power the driver always gets clobbered! Bring on oil refinery blockades and bring this country to a standstill then maybe politicians will listen and react to the concerns of the public who are fed up of continuous price hikes at the pump and see very little reduction in the price of a litre. And just before i go can anybody tell me what happened to"fuel price wars" at supermarkets which seriously saw a considerable price drop in a litre at the pump?? Is this just a thing of the past now like 80p was for a litre of fuel?? Anyway the supermarkets shouldn't be stepping in to sort this out because it should be the government acting on it to reduce fuel duty which accounts for 60% of every pound spent at the pumps!! SHAME ON THE GOVERNMENT!!!!!!!!
  • Jamie
    @Phil - what a load of tripe. Don't be a mug. If we were still under a Labour government we would be seeing an INCREASE in fuel duty as the Fuel Duty Escalator would still be in place. You do the math you muppet.
  • @Jamie
    Well we aint under a Labour government now so stop living in the past mate! The fact is that we are now under a coalition government and ok they have scrapped labours fuel duty escalator but we are still paying way more than what we should be for a litre of fuel.Nobody in this country needs a degree in maths to work that one out so if you have a car enjoy keep being ripped off and enjoy the 1p cut in duty which you wont see for very long you even bigger muppet!!

What do you think?

Connect with Facebook, Twitter, or just enter your email to sign in and comment.

Your comment