(Redirected from Gasoline tax)A 'fuel tax' (also known as a 'petrol tax', 'gasoline tax', 'gas tax' or 'fuel duty') is a
sales tax imposed on the sale of
fuel. In the
United States, the funds are often dedicated or
hypothecated to transportation, or even roads, so that the fuel tax is considered by many a
user fee. In other countries, the fuel tax is a source of general revenue.
In most countries the fuel tax is not imposed on fuel which is not intended for transportation: fuel used to power agricultural vehicles, and or home heating oil which is identical to
diesel. This creates an economic incentive for illegal use of fuel.
Effects
Because of the relatively
inelastic nature of demand for
petrol, in the short run the tax will be an effective source of revenue. In the long run, however, theory predicts that people adjust their consumption of petrol; that is, over a period of years, people will consume less as the price increases (by buying more fuel-efficient cars, for instance). Thus, some
environmentalists have advocated a fuel tax as a way to reduce reliance on fossil fuels.
In some regions of the world, differences in fuel taxes between countries result in a significant level of cross-border purchasing of motor fuel. This is particularly true in Europe, where large differences in fuel taxes, coupled with minimal or no border controls, encourage drivers to cross borders for the sole purpose of filling up their tanks with fuel. For example, petrol in
Luxembourg is typically around 20% cheaper than in neighbouring
Belgium. Since both countries belong to the
Schengen agreement, the border crossings are unmanned and almost unnoticeable, except for the large number of petrol stations on the Luxembourg side of the border. A similar situation exists along the
Northern Ireland border where historically fuel prices were much lower in Northern Ireland but in recent years the situation has reversed. In Western Europe, it is mostly small countries and territories (e.g. Luxembourg,
Andorra,
Gibraltar) that enjoy lower fuel taxes. This is possible because the reduced tax revenue caused by a lower fuel tax is offset by disproportionate numbers of drivers from neighbouring countries entering the small countries to pay the lower fuel tax. Most countries' customs regulations permit the duty-free import of the contents of a vehicle's built-in fuel tank, but there are exceptions.
Singaporean customs officials check the fuel gauges of vehicles leaving Singapore and require that the fuel tank be at least three quarters full, in order to limit the amount of lower taxed fuel that Singaporean residents can buy during short trips to
Malaysia. Recently, gas stations in
Argentina near the
Brazilian border list two different prices for gasoline, one for cars with Argentinian license plates and another one for foreign plates. This was done to restrict Brazilian drivers from buying cheaper fuel in Argentina, generating long lines at the gas stations and driving gas prices up. Gas stations on
Interstates in
New Jersey close to the
New York border typically witness large volumes of sales from drivers taking advantage of the double cuts of less expensive fuel blend and lower fuel sales tax resulting in a significant savings over New York.
Tax rates
Australia
The fuel tax system in Australia is very similar to
Canada in terms of its
double dipping tax rates, but varies in the case of exemptions including
tax credits and certain excise free fuel sources. Fuel taxes are handled by both the Federal and State Governments, including both an
Excise Tax and a
Goods and Services Tax or "GST". The tax collected is generally used to help fund national road infrastructure projects and repair roads, as well as provide extra revenue for other services.
At current time of writing (
June, 2006), the
Fuel Tax Bill 2006 is currently being debated in the
Australian Senate. If passed, changes to the information below could occur.
The
Goods and Services Tax of 10% is charged and included in the price of all fuel purchases in Australia.
The excise tax on commonly used fuels in
Australia as of
June, 2006 are as follows;
★ $0.38143 per litre on
Unleaded Petrol fuel (Includes standard, blended (
E10) and premium grades)
★ $0.38143/0.40143 per litre on
Diesel fuel (Ultra-low sulphur/Conventional)
★ $0.00 (Excise-Free) per litre on
Liquified petroleum gas used as fuel (
Autogas or LPG as it is commonly known in Australia)
★ $0.38143 per litre on
Ethanol fuel (Can be reduced/removed via Grants)
★ $0.38143 per litre on
Biodiesel (Can be reduced/removed via Grants)
'Note:' Petrol used for Aviation is taxed at $0.02854 per litre
The state government of
Queensland also provides an 8.354c/litre subsidy to most fuels bought (including Unleaded, Blended unleaded, LPG and Ethanol). This is usually reflected by an 8.354/litre difference at the pump price, as the subsidy is paid directly to retailers.
There are also a number of various
grants and
incentive schemes involving tax credits and rebates that generally apply to businesses or industries that rely heavily on the use of fuels, such as
transport and
aviation. There are also rebates that encourage the production and importation of
clean fuels.
Canada
The tax on fuel in Canada can vary greatly between locales. On average, about one-third of the total price of gas at the pump is tax.
Excise taxeson
gasoline and
diesel are collected both federal and provincial governments, as well as by some select municipalities (
Montreal,
Vancouver, and
Victoria); with combined excise taxes varying from 16.2 ¢/L in the
Yukon to 30.5 ¢/L in
Vancouver. As well, the federal government and some provincial governments (
Newfoundland and Labrador,
Nova Scotia, and
Quebec) collect
sales tax (
GST and PST) on top of the retail price ''and'' the excise taxes.
The Government of Canada collects about $5 billion per year in excise taxes on gasoline, diesel, and aviation fuel as well as approximately $1.6 billion per year from GST revenues on gasoline and diesel (net of input tax credits).
Collectively, the provincial governments collect approximately C$8 billion per year from excise taxes on gasoline and diesel.
Taxes collected by the federal government do not get reserved for any specific program. However, provincial taxes usually go to fund road repair and construction with a portion also being directly downloaded to municipalities.
[1]
Many Canadians cross into the United States to buy fuel due to lower fuel tax south of the line.
Netherlands
The sale of fuels in the
Netherlands is levied with an
excise tax.
A 1995 excise raise by
Dutch gulden 25 cents (€0.11), the ''Kok Quarter'' (€0.08 raise per litre
gasoline and €0.03 raise per litre
diesel), by then Prime-Minister
Wim Kok is now specifically set aside by the
second Balkenende cabinet for use in road creation and road and public transport maintenance.
The 2007 fuel tax was € 0,684 per litre or $ 3,5 per gallon. On top of that is 19% VAT over the entire fuel price, making the Dutch taxes one of the highest in the world.
People's Republic of China
In the
People's Republic of China, the fuel tax has been a very contentious issue. Efforts by the
State Council and the
Communist Party of China to institute a fuel tax in order to finance the
National Trunk Highway System have run into strong opposition from the
National People's Congress, largely out of concern for its impact on farmers. This has been one of the uncommon instances in which the legislature has asserted its authority.
United Kingdom
Main articles: Hydrocarbon oil duty
As of 2005 fuel duty in the
United Kingdom is:
★ 47.1 pence per litre for
ultra-low sulphur unleaded petrol/diesel
★ 50.9 pence per litre for conventional unleaded petrol
★ 53.27 pence per litre for conventional diesel
★ 27.1 pence per litre for
biodiesel and
bioethanol (to encourage conversion)
★ Zero VAT and duty, for jet fuel used for international aviation
'Note:' in the UK,
Value Added Tax (VAT), currently at 17.5%, is ''also'' charged on the price of the fuel ''and'' on the duty.
United States of America
The first U.S. state tax on fuel was introduced in February 1919 in
Oregon. It was a 1 cent per U.S. gallon (0.3¢/L) tax. In the following decade, all of the U.S. states (48 at the time), along with the
District of Columbia, introduced a gasoline tax. By 1939, an average tax of 3.8¢/gal (1¢/L) of fuel was levied by the individual states.
The fuel tax in Texas is currently set at 20¢/gal since being raised to that amount in 1991. In May of 2007, the Texas House of representatives unanimously voted to pass a '
gas-tax relief' period for the 2007 summer driving period. The measure was not passed by the state Senate.
While state fuel taxes had been around for more than a decade, the first federal gasoline tax in the United States was created on
June 6,
1932 with the enactment of the
Revenue Act of 1932 with a tax of 1 cent/gal (0.3¢/L). The U.S. federal gasoline tax
as of 2005 was 18.4¢/gal (4.86¢/L), and the gasoline taxes in the various states range from 10 cents to 33 cents, with an average about 22 cents per U.S. gallon (5.8¢/L), making the average combined tax on gasoline 42¢/gal. Unlike most goods in the U.S., the price displayed includes all taxes, rather than being calculated at the point of purchase.
How is this tax money spent? The head of the U.S. Dept. of Transportation stated on 15 Aug. 2007 that about 60% of our federal gas taxes are used for highway and bridge construction. The remaining 40% goes to other, unrelated uses.
Germany
★ 47.1 cents per litre for ultra-low sulphur Diesel
★ 65.45 cents per litre for conventional unleaded petrol
See Also
★
Carbon tax
References
1. Backgrounder - How municipalities benefit from provincial gas tax funding
External links
★
Excise Tax Rates in
Australia
★
Oil and Gas Prices, Taxes and Consumers (
Canada)
★
★ Includes Price Components of Gasoline, Government Tax Rates and Revenues, and International Price and Tax Comparisons.
★
Fuel tax in the
United Kingdom
★
History of the gas tax in the
United States
★
International Fuel Prices 2007 with diesel and gasoline prices of 172 countries and information on fuel taxation for state financing
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