With petrol prices set to reach £1.20 per litre by Easter one of the country’s leading independent financial advisers is warning people that they can expect things to get worse unless the Government stop their actions.
Worldwide Financial Planning’s managing director, Peter McGahan, believes there is scope for fuel to rise to as a much as £1.50 per litre over the coming months.
The boss of the Truro and Wadebridge based company spelt out the grim message as a rise in duty is set to hit the pumps and people’s pockets in time for the Easter weekend.
“As I have said many times in the past there is no reason for petrol prices at the pump, or in the barrel, to be so high,” said Peter
“But although we are coming out of the recession we’ve got deflation in the system, which adds great pressure to the economy.
“With a lot of slack in the system it gives the Government the perfect opportunity to generate some easy money by increasing tax on fuel.”
According to Mr McGahan’s calculations tax has risen on petrol by 100 percent since 1995, an average increase of around 6.5 percent per year.
“People are grumbling about the rise in fuel prices but no one seems to take any action,” added Mr McGahan.
“If we were in France there would be uproar, blockades and strikes to try and avert the rises.
“I had expected something to happen in this country when we went over the £1 per litre mark here, but people just accepted it.
“As a result it’s very easy to see petrol prices rising to £1.50 per litre over the coming months if any real pressures come in via oil.”
Tax currently accounts for 67 percent of the cost of a litre but Mr McGahan expects that figure to rise to levels last seen in 2000.
“Before the fuel protests in 2000 tax accounted for 77 percent of the cost per litre, but that was only 76 pence per litre as opposed to today’s prices,” said Mr McGahan.
“I doubt a change of Government would have an effect as the tax level on fuel in 1996 – the Conservatives last year in power – was 76.9 percent.
“However in 1996, the Government was only stripping out 39.4 pence per litre whereas today that is 75 pence.
“Unless the correct action is taken quickly in the UK and U.S. to halt proprietary trading, which we warned about two years ago, coupled with a halt to appalling tax rises £1.20 will seem like a distant memory bargain.”
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