Taxation: incredible hypocrisy as Labour calls for fuel tax reversal

Ed Balls (it really is his name) is the Shadow Chancellor: that makes him the opposition spokesman on the economy.

When Gordon Brown was Chancellor and Tony Blair was Prime Minister, Brown's soaring public spending was in part funded by rapidly increasing oil (and therefore petrol and diesel) prices. The UK taxes these fuels by a combination of a flat-rate duty plus an ad valorum Value Added Tax. when petrol prices rise, that rise is compounded by the VAT - and provides a windfall for the Revenue.

Brown needed every penny he could find from anywhere: his so-called "stealth taxes" grabbed an ever-increasing portion of salaries and investment income - and he dreamt up new taxes, too. Specifically, he charged a "windfall tax" on oil companies who - ironically - had benefited from the same rising oil prices as the Revenue was benefiting from.

Balls argues that recent rises in VAT have added 3p to the price of a litre of fuel, already some of the most expensive in the world. But VAT increases imposed on 4 January were needed to fix the desperate holes - some GBP700,000 million on some estimates - in the UK's budget, holes created by Balls' party when in power until last year.

But, unlike the arrogance of the Labour government, the current Conservative-Liberal Democrat coalition is not sitting on its hands as prices rise.

Rural and island communities always pay more for their petrol and it was in major part country folk that were pressing Blair, whose focus was always urban (it's where the voters are and where Labour voters are concentrated. Rural communities tend to be less socialist in their voting patterns). So George Osborne, the current Chancellor, is reported in some UK media today to be planning to reduce the price by what some are terming a "subsidy" but which is, in fact, a tax cut on fuel on some Island and remote rural areas. If successful, and if fraud can be avoided, other rural areas may be brought into the scheme.