Marking up duty hike could lead to legislation

COMMERCE and Employment will keep a close eye on prices when fuel duty rises come into effect in the new year. From tomorrow, duty on petrol and diesel will be set at 29p per litre following the States' decision to abolish motor tax.

Petrol is already levied at 15p per litre, which will rise by 14ppl. Diesel currently has no duty at all and is set to rise by the full 29ppl.

An independent report published in May said that local retailers were, on average, making 18p a litre on petrol sales and 17p on diesel.

There had been fears that retailers would use the impending duty rises to further increase those profit margins.

But the Guernsey Motor Trades Association rejected those concerns and said garages would try to protect customers from the duty rises for as long as possible.

Stuart Falla, Commerce and Employment minister, said the report, commissioned by the department, had served a valuable purpose.

'Before the report was done it seemed to me that no one was keeping an eye on the price of fuel,' he said.

'Now people keep an eye on what they are being charged. There is far more awareness in that there might have been some exploitation. But garages are now competing with each other and we have seen some prices come down.'

He said the department would wait to see how the trade reacted to the duty increases before deciding whether it needed to act.

'We will be watching whether, when the duty rises come in, the fuel companies pass on only the duty rises or whether they choose to add a large margin as well,' he said.

'If the industry behaves well, then perhaps it can be trusted. If they don't behave, well, then perhaps one needs new laws.'

Deputy Falla said it was up to the garages themselves, not to him, to decide whether their margins were high.

'I think it depends on the size of the garage,' he said. 'A small garage can maybe justify having an increase in their margins because they might only sell a few litres,' he said.

'But a large garage that sells thousands of litres might not be able to justify an increase.'

GMTA president Dave Beausire said garages would eventually have no choice but to put the full duty on.

'There is no way they can absorb it,' he said.

'But I think it would be highly unlikely that anyone will try to increase their margins.'

He said the duty increases would spell the end for many garages.

'For the small garages that are reliant on fuel, I think it's definitely the final nail in the coffin,' he said. 'It will change the face of the fuel industry forever.

'The States has done it to collect revenue.

'It's not a green tax, it's just a tax to accumulate as much money as possible from the easiest source.'