Fast Facts: Budget 2011 and your pocket
Well, 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.