The Orcadian Online Archive

Road Tax for islanders should be lowered says Parliamentary report
(Date: April 9, 2001)

The Scottish Executive should consider the reduction of road tax for all vehicles registered in the Scottish Islands, says a Parliamentary report published today. This would be the most effective way of helping to offset fuel prices in remoter rural areas, the report claims.

The Enterprise and Lifelong Learning Committee's report also makes recommendations on the practicalities of a number of other options suggested to offset the effects of higher fuel prices in rural areas. These include the Committee's views on:

A reduction in fuel excise duty or VAT.
The use of Low Sulphur Petrol or Liquid Petroleum Gas or other fuel alternatives.
Co-operative schemes for the bulk buying and supply of fuel.
The scope for developing a voluntarily rationalised network of fuel stations to improve turnover or throughput.
These key recommendations from the Scottish Parliament's Enterprise Committee follow a recent inquiry by MSPs into the reasons behind rural petrol stations charging higher fuel prices than their central belt counterparts.

Committee convener Alex Neil MSP said:

"On the basis of evidence examined, our Committee has concluded that there are two main factors affecting the price of fuel in rural areas: the additional costs involved in transporting fuel to remote areas, and the lower turnover or throughput of small petrol stations.

"Contrary to our expectations, we found that the consequences of low turnover were perhaps more critical than transportation costs and more significant to the pricing differential than had at first been anticipated. It is this factor which largely explains the difference between the remoter areas and the larger turnover sites in the central belt.

"The pattern of the rural fuel differential is not, however, uniform across the Highlands and there are significant local variations. It's worth also noting that the Office of Fair Trading is due to re-examine market conditions and competition levels in the Western Isles.

"Overall, the importance of turnover in the rural fuel price equation is a matter which has influenced our Committee's recommendations. As such, our unanimous cross-party report recommends that the implications of introducing a lower rate of Vehicle Excise Duty for all Scottish Islands should be examined by the Scottish Executive in consultation with their colleagues at Westminster.

"We recognise the very real and genuine concerns expressed over the impact that higher fuel prices have on the economies of remote, rural areas. We believe that this reduction in road tax offers a direct, practical means of redressing the current economic imbalance endured by some of our most disadvantaged business communities."