Background
In the United Kingdom, tax on fuel for road use is made up of two elements, fuel duty and value added tax (VAT). Fuel duty is applied at a fixed amount per litre by fuel type, and VAT is then added as a percentage of the combined total of the cost of the fuel and the fuel duty. Historically, fuel duty was increased annually, broadly in line with inflation. In 1993 the fuel price escalator was introduced by the Conservatives, justified as being designed to encourage less motor vehicle use, and thus combat climate change. The idea was to annually increase fuel duty, initially at 3%, later rising to 5%, above the rate of inflation. The Blair administration then increased the rate at which the escalator exceeded inflation to 6%.
Read more about this topic: Fuel Protests In The United Kingdom
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