Fuel tax
(Redirected from Gasoline tax)
Categories: Taxation | Petroleum products
Contents |
Introduction
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. Frequently, as in the United States, the funds are 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 considered a source of general revenue and is not designated for roads.
In most countries the fuel tax is not imposed on fuel which is not intended for transportation such as fuel used to power agricultural vehicles and home heating oil which is identical to diesel. This creates an economic incentive to illegally use fuel not intended for transportation.
Effects
Because of the inelastic nature of demand for petrol, in the short run the tax will be an effective source of revenue. In the long run, however, people are more able to 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 environment-damaging 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. 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. Singapore 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 Singapore residents can buy during short trips to Malaysia.
Tax rates
Canada
The tax on fuel in Canada can vary greatly between provinces. On average, 40 to 50% of the total price of gas at the pump is tax. The federal government receives its share through the excise tax (10 ¢/L) and the Goods and Services Tax (7% of the whole price, taxes included - it is a tax on a tax). Most of the variation comes from the provincial tax. The lowest being the Yukon with 6.2 cents per litre and the highest being Newfoundland and Labrador with 16.5 cents per litre. In addition to this there is sometime provincial sales tax, such as in Quebec (a tax on a tax on a tax), and in larger urban centers there is a transit tax.
Taxes collected from the federal government (totaling $10,000,000,000 a year) do not get reserved for any specific program. However, provincial taxes usually go to fund road repair and construction.
Source: [1]
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
As of 2005 fuel duty in the United Kingdom is:
- 47.1 pence per litre (83 ¢/L, US$3.13/USgal) for ultra-low sulphur unleaded petrol/diesel
- 50.9 pence per litre (89 ¢/L) for conventional unleaded petrol
- 53.27 pence per litre (94 ¢/L) for conventional diesel
- 27.1 pence per litre (48 ¢/L) for biodiesel and bioethanol (to encourage conversion)
United States of America
The first U.S. state tax 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 48 US states and Washington, DC introduced a gasoline tax, and by 1939 an average tax of 3.8¢/gal (1¢/L) of fuel was levied by the individual states.
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). Unlike most goods in the US, the price displayed includes all taxes, rather than being calculated at the point of purchase.
See also
External links
- Fuel tax in the United Kingdom
- History of the gas tax in the United States
- International Fuel Prices 2005 with diesel and gasoline prices of 172 countries and information on fuel taxation for state financingnl:Benzineaccijns