§ Mr. Mike Thomasasked the Chancellor of the Exchequer on what assumptions his Minister of State's reply, Official Report, 26th May 1977, column 1537, estimating that abolition of vehicle excise duty would add 18½p to the price of a gallon of petrol was based; and what would be the amount necessary to be added to the price of petrol to raise the lost revenue if only private motor car and motor cycle excise duty were abolished.
§ Mr. Robert SheldonAn increase of 18½p per gallon in the price of petrol would be necessary to compensate for the abolition of vehicle excise duty on all private vehicles. This estimate is based on the assumptions that the duty on private vehicles will yield £750 million in the current financial year, and that a price increase of this order would lead 329W to a reduction in petrol consumption of around 4 per cent. To compensate for the total abolition of vehicle excise duty, an increase of about 18½p per gallon in the duty on all road fuels would be required. Allowing for VAT, this would raise the price of petrol for the private motorist by 21p a gallon.