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Bill Carmichael: Why life's a gas in the US



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Published Date: 27 June 2008
THERE was outrage in the United States recently when the price of gas – or what we call petrol – hit $4 a gallon.

I thought, wow, that does sound expensive, especially when you consider it was about half this price 18 months ago. But then I remembered the exchange rate – and £2 a gallon doesn't sound too bad.

But hold on, a US gallon is quite a bit smaller th
an an imperial gallon, so is it such a good deal?

I decided to do this comparison properly and out came the pocket calculator. The result, in rough figures, is that motorists in the US are paying about 53 pence a litre for unleaded and 63 pence for diesel – or less than half the cost of fuel in the UK.

This week, it was revealed that British motorists are paying an average of 118p for a litre of unleaded, and 131p for diesel – that's a stonking £6 a gallon (imperial, of course).

Why such a huge contrast? We are both oil-producing nations and we have both been hit hard by the rising cost of oil on international markets.

In fact, this massive gap illustrates a key difference in the relationship between people and government in the US and the UK. On this side of the Atlantic, the Government sees its role as punishing the hard-working citizenry by squeezing until the pips squeak, whereas the US government does all in its power to encourage people to use their talents to create wealth.

Nowhere is this clearer than the approach to fuel prices. One key reason why prices are so much higher in the UK is tax. In the UK, we pay about 50p a litre in fuel duty, and then we pay a further 17.5 per cent VAT on both fuel and duty. Without these punitive rates of tax, fuel prices in the UK would be broadly comparable with the US.

And fuel taxes in the US? They differ from state to state, but, on average, and combined with state and federal taxes, these amount to about 12.4 cents a litre – or a little over 6p.

Even more revealing has been the response to the latest oil crisis. In the US, both Republican Presidential candidate John McCain and his erstwhile Democratic rival, Hillary Clinton, promised a three-month "gas tax holiday" whereby federal fuel duty would be suspended throughout the summer peak driving months.

Both accepted that petrol duty is a regressive tax that impacts much more heavily on the poor. So much so that both advocated that the state take a $10bn hit in terms of revenue in order to ease the burden on hard-working families.

And what does Gordon Brown do? He wrings his hands and grovels to the Gulf States in embarrassing fashion, begging them to increase production. They, of course, have taken absolutely no notice.

Meanwhile, Brown is determined to impose yet another two pence rise in
fuel duty come the autumn.

Perhaps that is one reason why the US is a vigorous, successful democracy, while the UK is in a spiral of decline.



Polls apart

Will a bit of tinkering with electoral law improve the turnout by voters and improve democratic accountability?

The Government seems to think so, because it doesn't know when to leave
well alone.

The relaxation of postal voting rules in 2001 led to widespread fraud that would put a banana republic to shame.

But rather than address this problem, Justice Minister Michael Wills revealed this week that, in future, elections may be held on two days over the weekend, rather than on a Thursday, as has been the tradition since 1945.

There is no evidence that a weekend poll would boost turnout.

There is also the matter of hugely increased cost – £148m compared with £90m for a Thursday poll.

How about politicians actually engaging with the electorate and coming up with policies that will encourage people to vote?



The full article contains 668 words and appears in n/a newspaper.
Page 1 of 1

  • Last Updated: 27 June 2008 8:32 AM
  • Source: n/a
  • Location: Yorkshire
 
 

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