As a prelude to the oral evidence that we are to give to the Committee regarding the impact on trade and industry of motor fuel taxation, it was indicated that the Committee would welcome written memoranda. Total Fina Elf offers the following facts for consideration by the Committee.

MOTOR FUEL DUTY IS AT A SUBSTANTIALLY HIGHER LEVEL IN THE UK THAN IN OTHER EUROPEAN COUNTRIES

  The attached table shows the comparison of duty levels for Petrol and Road Diesel covering 14 European countries. The figures are stated in Euro per cubic metre for both products. The table shows that:

—  The UK has the highest duty level for both products of all the European countries.

—  For Petrol, the UK duty difference ranges from c.135-280 per cent of the other European countries.

—  For Road Diesel, the UK duty difference ranges from 210 per cent to 330 per cent of the other Countries.

THE DUTY COLLECTION POINT IS DIFFERENT

  In the UK, the duty is charged on the motor fuels as the fuels leave the refinery (ie refinery gate) on its way to the terminals. Payment terms are on average approximately 30 days. This contrasts with the European practice where oil duty is typically charged as it leaves the final terminal delivery point with payment terms similar to that in the UK. This difference in duty collection point is significant and impacts the final cost of product because:

—  Due to the time it takes to transport the oil from the refinery to the terminal and also the time the oil remains in terminal stock prior to delivery to road tanker, the payment in the UK is made up to c.15 days before that in Europe.

—  The oil is transported between the refinery and terminal in the UK with duty paid therefore any physical hydrocarbon losses during transit and terminalling are also duty paid. This actually discourages stockholding in the UK outside the refineries at both terminals and service stations.

—  In addition, the UK duty point applies to motor fuels refined in the UK. Imported motor fuels can be brought directly into some product terminals "under bond" with the duty deferred until the product leaves the terminal.

  Because the downstream business of Total Fina Elf in the UK is to refine, distribute and market petroleum products to mostly inland UK markets, it is difficult for us to comment on the relative impact of the UK motor fuel taxation policy on our sector. It is also difficult to judge the price sensitivity and elasticity relative to the other European markets as there are many other factors at play. For these reasons, our comments above should not be viewed as arguments for or against the current level of motor fuel taxation but just some factual information about the UK motor fuels duty policies relative to the other European countries. We respect government's right to tax. We also realise that all governments are supported through various forms of taxation so it is difficult to analyse one segment without a comprehensive review of the whole. We hope the Committee finds these facts useful.

24 October 2000

COMPARISON OF EUROPEAN DUTY RATES¹ (EXCLUDING VAT)