Why are BOT Gibraltar's petrol prices so much lower than the UK's?

Things are getting pretty desperate when it comes to looking for fuel. Prices in the UK are astronomical, but that does not mean it is the case everywhere in British territory. 

Yesterday, we floated (in jest) the idea that hopping over to France for petrol might be of benefit, as the voucher scheme implemented by the supermarket chain Casino can result in fuel that costs less than one euro per litre.

However, you can actually still find reasonably priced fuel in British territories. Albeit British Overseas Territories. 

In Gibraltar, fuel prices are as much as £0.70 lower than in the UK. As recently as two weeks ago you could get a litre of petrol for £1.21, whereas in the UK we are looking at over £1.90 per litre. 

Why is this? Well, it’s all about taxes. We have become more familiar with the double government tax on fuel over the last couple of months than perhaps ever before. In Gibraltar, they pay no VAT on fuel, and the fuel duty is set by the Gibraltar government, not the central UK government. 

In addition, HITC reports that fuel duty was reduced from to £0.25 for both petrol (previously £0.38) and diesel (previously £0.40) until the beginning of July, which also contributed to the lower fuel prices. 

But, unlike the fuel duty, the VAT situation regarding fuel in Gibraltar is unchanged. There, VAT does not apply. This is because the taxation system in Gibraltar exists separately from the UK legal system, and, as previously mentioned, the taxation is decided by the Gibraltar government. 

Earlier today we wrote that the Swiss government is planning to introduce a tax on electric vehicles to make up for the government income lost through lower fossil fuels sales. 

So, is the UK government likely to ever remove VAT on fuel or lower fuel duty on a permanent basis? Almost certainly not.

Furthermore, as governments - including in the UK - try to push people towards electric vehicles (like the Maeving RM1, of which you can see our review) and other alternative fuels (such as synthetics or hydrogen), it is perhaps even more likely that fuel duty could increase. But, that is simply speculation. 

Anyway, the Gibraltar scenario is an interesting look at how things can work in different ways, although such alternatives are unlikely to become relevant to when speaking about central governments of nation states with larger populations like Britain. 

Triumph TE-1 Specs and Technical Review