approximately 65% of the pump cost of petrol and diesel goes to fund public spending. As this falls,alternative sources of revenue will be needed
The switch to electric cars poses a large financial problem for the government – because every time a driver switches from a petrol or diesel car to an electric vehicle, the government loses 57.95p per litre in fuel tax at every fill-up. In total, and duties on petrol and diesel add up to almost 28bn a year for the exchequer. Worse for the chancellor of the day,petrol and diesel sales make a contribution to VAT. VAT is charged at 20% of the wholesale price plus the duty, which equates to 16.7% of the final price. That’s a form of double taxation and explains why more than 65% of the cost at the pumps goes to the exchequer.
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Source: theguardian.com