Fuel tax is a tax put on the sale of fuel. Governments see the fuel tax as a source of revenue, with only some of the revenue put towards the maintenance of roads and highways.

Fuel tax in the United Kingdom has risen steadily since 1979 and is now having a major impact on the average motorist.

In addition to Fuel Duty another tax is charged at the pump and this is Value Added Tax (V.A.T.) This isn't just calculated on top of fuel but as a percentage of the fuel price and the fuel duty added together. This in itself has caused outrage amongst British drivers. Why would the British Government impose this double taxation rate? The reason is that the taxes raised are huge and the Government also claim that high fuel duties protect the environment by discouraging people to use their cars.

For British motorists however the decision to leave the car at home is not as straightforward as it may seem. The car is an essential daily need. If choosing to travel without the car then adequate public transport needs to be available. Many in the U.K. will tell you that this just isn't the case.

As well as the fuel duty rising there are other factors that come into play to force the price of the petrol / diesel up. The fuel cost is complicated but it is directly affected by the cost of crude oil and the price of this rises and falls dependent on global demand.

The history of the fuel tax is interesting. In the U.K. we had something known as the "Fuel Escalator". In 1993 the Conservatives were in Government and they introduced the Fuel Price Escalator. At this time in history British fuel was the third-cheapest in Europe. It is now the most expensive.

This Fuel Escalator policy was controversial because when it was introduced it set the price of fuel at 3% over the rate of inflation. This meant 3p onto a litre of petrol which resulted in the duty on a litre of petrol becoming 72.8% of the total cost.

The Conservative Government came to an end in 1997. Their escalator policy was set at 5% and 11.1 pence had been added to the cost of unleaded fuel. In percentage terms it meant that 76.3% of the total cost of a litre of petrol was duty. Labour then drove this higher in their first budget. 3p was added to a litre of fuel and taxes became 81.5% of the total price of fuel

The Chancellor of the Labour Government at that time was Gordon Brown and he decided to get rid of the Fuel price escalator. Instead he introduced "due Budget process". This basically translated as "we will add duty as we see fit".

The Cost Of Fuel Today in 2010

Petrol prices have continued to rise steadily and on 1st April 2010 the price of duty rose by one penny. This was the first of a three-stage tax duty price increase announced by the Chancellor in the last Budget. These increases will cause the price of fuel and diesel to reach record highs.

The three stage process introduced by the Chancellor, Alistair Darling means that the price of duty will increase by one pence on the 1st October 2010 and 1st January 2011.

How Will The Average Motorist Be Impacted By The Fuel Tax Rises?

Whilst a penny increase here and a penny increase there may not seem like a lot it will have an impact on the average motorist. If you consider that the average household debt in the United Kingdom was 18,324 (March 2010), including unsecured loans and excluding mortgages it is evident that many are not coping with their financial obligations as it is. With the economy in official recession paying more in taxes, no matter how slight, will be noticed by the average householder.

There are ways in which we can reduce our expenditure without stopping our spending. One of these ways is by using a special card that when used at a leading Supermarket can generate a 5 per cent monthly cashback on our petrol purchases.

As the price of fuel increases looking out for information such as this and then putting it into action should be your priority. It can save a huge amount of money annually and lead you to beat the fuel tax rise.

Learn more about Fuel Tax. Stop by Kathy Williams's site where you can find out all about the U.K.'s cheapest petrol and what it can do for you.