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A fuel tax (also known as a petrol, gasoline or gas tax, or as a fuel duty) is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation. Fuel tax receipts are often dedicated or hypothecated to transportation projects, in which case the fuel tax can be considered a user fee. In other countries, the fuel tax is a source of general revenue. Sometimes, a fuel tax is used as an ecotax, to promote ecological sustainability. Fuel taxes are often considered by government agencies such as the Internal Revenue Service as regressive taxes. [1] [ failed verification ]
Fuels used to power agricultural vehicles, as well as home heating oil which is similar to diesel, are taxed at a different, usually lower rate. These fuels may be dyed to prevent their use for transportation.
Aviation fuel is typically charged at a different rate to fuel for ground-based vehicles. Jet fuel and avgas can attract different rates. In many jurisdictions such as the United States and the European Union, commercial aviation fuel is tax free.
Other fuels such as gases, or solid fuels such as coal, may also be taxed.
In countries with a sales tax or a value added tax, these taxes may also be levied on top of fuel taxes. The rate can vary depending on the fuel, as well as the location.
Taxes on transportation fuels have been advocated as a way to reduce pollution and the possibility of global warming and conserve energy. Placing higher taxes on fossil fuels makes petrol just as expensive as other fuels such as natural gas, biodiesel or electric batteries, at a cost to the consumer in the form of inflation as transportation costs rise to transport goods all over the country.
Proponents advocate that automobiles should pay for the roads they use and argue that the user tax should not be applied to mass transit projects.
The Intergovernmental Panel on Climate Change, the International Energy Agency, the International Monetary Fund, and the World Bank have called on governments to increase gasoline tax rates in order to combat the social and environmental costs of gasoline consumption. [2] Fuel taxes can be implicit carbon pricing. [3]
International pump prices for diesel and gasoline are tracked by several websites, including Bloomberg L.P. [4] Price differences mostly reflect differences in tax policy.
A Nature study has shown that while gasoline taxes have increased in more countries than they have decreased in during the period 2003–2015, the global mean gasoline tax has decreased due to greater consumption in the low-tax countries. [2]
Chinese gasoline taxes have increased the most among the top twenty CO2-emitting countries over the period 2003–2015. [2]
In China, fuel tax has been a very contentious issue. Efforts by the State Council 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. [6]
The following is a list of fuel tax rates for different fuels in Hong Kong: [7]
The following is a list of fuel tax rates for different fuels in Singapore: [8]
In India, the pricing of fuel varies by state, though central taxes still are part of the pump price of fuel. The Central and state government's taxes make up nearly half of petrol's pump price. The Central govt has different taxes, which amount to about 10–20% of the final cost. The states taxes vary, but on average end up making about 17–20% of the final cost. As a result, approximately 50% - 60% of the pump cost goes to the government in the form of different taxes.
For example, in Delhi, as of February 18, 2021, price of petrol is ₹89.54 (US$1.10) per litre. Out of this ₹32.98 (40¢ US) go to Central Govt of India in the form of excise and customs tax. ₹19.32 (23¢ US) is collected by state government in the form of sales tax and entry tax. Thus, a total of ₹52.30 (63¢ US) is collected due to various taxes (which accounts for around 58% of the total price). [9]
In Israel, tax on fuel is 1.35 USD per liter which includes direct fuel tax and VAT. This totals to 78% of total pump price. [10]
Jet fuel tax is banned on commercial flights within the European Union, according to the 2003 Energy Taxation Directive. [11] It can be levied on domestic flights or by agreement between Member States, however no such agreements exist.
As of 2017, the excise tax on gasoline was €0.651 per liter (regional prices varied from €0.407 to €0.6682). With a VAT rate of 20%, the percent of the total price of gasoline that came from taxes was 63.9% [12] The excise tax on diesel fuel was €0.531 per liter (€0.5307 to €0.5631). With the 20% VAT, 59.3% of the total cost of diesel fuel was taxes. [13]
Petroleum products destined for utilisation by aircraft engaged in commercial flights outside of the customs territory of continental France are exempt from all customs duties and domestic taxes. [14] Recently, a rise of 23% in the diesel fuel tax has caused serious protests in major cities of France, leaving disruption and damage behind them. [15] Before the protests, the French government expected to increase both the petrol and diesel taxes until they both reached €0.78 per liter in 2022. [16]
Fuel taxes in Germany are €0.4704 per litre for ultra-low sulphur Diesel and €0.6545 per litre for conventional unleaded petrol, plus Value Added Tax (19%) on the fuel itself and the Fuel Tax. That adds up to prices of €1.12 per litre (€4.24/US gal; €5.09/imp gal) for ultra-low sulphur Diesel and €1.27 per litre (€4.81/US gal; €5.77/imp gal) for unleaded petrol (December 2019).
Since January 2023, petrol is taxed at a rate of €0.53799/litre and diesel at a rate of €0.42875/litre, [17] with a VAT of 16% added to the total price. As of 2022, a "maximum fuel price" has been established by the government, capped at €1.546/litre for EURO 95 petrol and at €1.525/litre for diesel as of 11 November 2023. [18] [ dead link ]
The sale of fuels in the Netherlands is levied with an excise tax. As of 2015, petrol excise tax is EUR0.766 per litre and diesel excise tax is EUR0.482 per litre, while LPG excise tax is EUR0.185 per litre. [19] The 2007 fuel tax was €0.684 per litre (€2.59/US gal; €3.11/imp gal). On top of that is 21% VAT over the entire fuel price, making the Dutch taxes one of the highest in the world. In total, taxes account for 68.84% of the total price of petrol and 56.55% of the total price of diesel. [20] A 1995 excise was raised 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.
Motor fuel is taxed with both a road use tax and a CO2-tax. The road use tax on petrol is NOK 4.62 per litre and the CO2-tax on petrol is NOK 0.88 per litre. The road use tax on auto diesel is NOK 3.62 per litre mineral oil and NOK 1.81 per litre bio diesel. The CO2-tax on mineral oil is NOK 0.59 per litre. [21]
In Poland half of the end-user price charged at a petrol station goes towards 3 distinct taxes:
Excise and fuel tax are prescribed by European Commission law, and therefore cannot be lower in any EU nation. However it is even higher than this EU minimum in Poland, a policy pursued by the former Minister of finance. [22]
Tax on mineral resource extraction (2008–2009):
Excise tax on motor fuel 2008–2009:
Other fuel (like avia gasoline, jet fuel, heavy oils, natural gas and autogas) prices has no excise tax.
Value Added Tax — 18% on fuel and taxes.
Full tax rate is near 55% of motor fuel prices (ministry of industry and energy facts 2006).
The fuel tax in Sweden comprises a carbon tax and an energy tax. The total tax (including value added tax) is, from July 1, 2018, 8.425 kr per liter petrol and 7.425 kr per liter diesel. [23]
From 23 March 2022 the UK duty rate for the road fuels unleaded petrol, diesel, biodiesel and bioethanol is £0.5295 per litre (£2.41/imp gal; £2.00/US gal). [24]
Value Added Tax at 20% is also charged on the price of the fuel and on the duty. An additional vehicle excise duty, depending on a vehicle's theoretical CO2 production per kilometre, which is applied regardless of the amount of fuel actually consumed, is also levied.
Diesel for use by farmers and construction vehicles is coloured red (red diesel) and has a much reduced tax, currently £0.1133 per litre (£0.515/imp gal; £0.429/US gal). [24]
Jet fuel used for international aviation attracts no duty, and no VAT. [25]
Fuel taxes in Canada can vary greatly between locales. On average, about one-third of the total price of gas at the pump is tax. Excise taxes on 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 (73.6 ¢/imperial gal)) in the Yukon to 30.5 ¢/L ($1.386/imperial gal) 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. [26]
The first U.S. state to enact a gas tax was Oregon in 1919. [27] The states of Colorado, North Dakota, and New Mexico followed shortly thereafter. By 1929, all existing 48 states had enacted some sort of gas tax. [28] Today, fuel taxes in the United States vary by state. The United States federal excise tax on gasoline is 18.4 cents per US gallon (4.9 ¢/L) and 24.4 cents per US gallon (6.4 ¢/L) for diesel fuel. On average, as of July 2016, state and local taxes add 29.78 cents to gasoline and 29.81 cents to diesel for a total US average fuel tax of 48.18 cents per US gallon (12.73 ¢/L) for gas and 54.21 cents per US gallon (14.32 ¢/L) for diesel. [29]
The state and local tax figures includes fixed-per-gallon taxes as well as variable-rate taxes such as those levied as a percentage of the sales price. For state-level fuel taxes, nineteen states and the District of Columbia levy variable-rate taxes of some kind. [30] The other thirty one states do not tie the per-gallon tax rate to inflation, gas prices, or other factors, and the rate changes only by legislation. As of July 2016, twenty one states had gone ten years or more without an increase in their per-gallon gasoline tax rate. [31]
Because the fuel tax is universally styled as a "road use" tax, exempting off-road farming, marine, etc. use; states impose a tax on commercial operators traveling through their state as if the fuel used was bought there, wherever the fuel is purchased. While most commercial truck drivers have an agent to handle the required paperwork: what's reported is how much tax was collected in each state, how much should have been paid to each state, the net tax for each state and the combined net tax for all states to be paid by or refunded to the operator by their base jurisdiction where they file. The operator carries paperwork proving compliance. The member jurisdictions, the US states and the CA provinces, transmit the return information to each other and settle their net tax balances with each other either by a single transmittal through a clearinghouse set up by the IFTA and operated by Morgan Stanley, or by separate transfers with the other member jurisdictions. [32]
The fuel tax system in Australia is very similar to Canada in terms of featuring both a fixed and a variable tax, but varies in the case of exemptions including tax credits and certain excise free fuel.
Since October 2018, the fuel tax in Australia is A$0.412 per litre for petrol and ultra-low sulphur diesel (conventional diesel being taxed at A$0.412 per litre) and the excise for LPG is $0.282 per litre. Since 2000, there is also the GST (goods and services tax) on top of the fuel tax and inflation calculated twice a year called CPI (consumer price index) into the fuel tax since 2015. [33] [ circular reference ] [34]
Fuel taxes in New Zealand are considered an excise applied by the New Zealand Customs Service on shipments brought into the country. A breakdown of the fuel taxes is published by the Ministry of Economic Development. Excise as at 1 August 2012 totals 50.524 cents per litre (NZ $2.30/imp gal; $1.91/US gal on petrol. In addition the national compulsory Accident Compensation Corporation motor vehicle account receives a contribution of 9.9 cents per litre (45 ¢/imp gal; 37 ¢/US gal). The ethanol component of bio blended petrol currently attracts no excise duty. This was to be reviewed in 2012. Diesel is not taxed at the pump, but road users with vehicles over 3.5 tonne in Gross Laden Weight and any vehicles not powered wholly by any combination of petrol, LPG or CNG must pay the Road User Charge instead. The Goods and Services Tax (15%) is then applied to the combined total of the value of the commodity and the various taxes. On 25 July 2007 the Minister of Transport Annette King announced that from 1 July 2008 all fuel excise collected would be hypothecated to the National Land Transport Programme. [35]
South Africa imposes a fuel tax, in Dec 2020, per (unleaded 93 octane, inland) liter, composed of the Fuel Levy – R3,37, Road Accident Fund levy – R1,93, associated costs – R3,12, and the Basic Fuel Price – R5,81 for a total of R14.23. (R = South African Rand (ZAR) ~ R15 per US$ in Dec 2020) [36]
The gallon is a unit of volume in British imperial units and United States customary units. Three different versions are in current use:
Gasoline or petrol is a petrochemical product characterized as a transparent, yellowish, and flammable liquid normally used as a fuel for spark-ignited internal combustion engines. When formulated as a fuel for engines, gasoline is chemically composed of organic compounds derived from the fractional distillation of petroleum and later chemically enhanced with gasoline additives. It is a high-volume profitable product produced in crude oil refineries.
A filling station is a facility that sells fuel and engine lubricants for motor vehicles. The most common fuels sold are gasoline and diesel fuel.
The fuel protests in the United Kingdom were a series of campaigns held in response to the rising petrol and diesel fuel prices for road vehicle use. There have been three major campaigns amongst many other protests in the 21st century. The first major protest in 2000 was primarily led by independent lorry owner-operators. One group of lorry owner-operators from the South East of England formed a protest group called "TransAction" that protested at oil refineries and fuel depots in Essex. Protests and blockades of oil facilities caused widespread disruption to the supply of petroleum products. The aim of the protests was to secure a reduction in the fuel duty rate on petrol and diesel, which the government refused to enact. After the protest ended, the government did announce a freeze on fuel duties, and promised changes would be made to the way that goods vehicles were taxed, which would include the taxing of foreign vehicles operating on British roads.
Liquid fuels are combustible or energy-generating molecules that can be harnessed to create mechanical energy, usually producing kinetic energy; they also must take the shape of their container. It is the fumes of liquid fuels that are flammable instead of the fluid. Most liquid fuels in widespread use are derived from fossil fuels; however, there are several types, such as hydrogen fuel, ethanol, and biodiesel, which are also categorized as a liquid fuel. Many liquid fuels play a primary role in transportation and the economy.
Autogas or LPG is liquefied petroleum gas (LPG) used as a fuel in internal combustion engines in vehicles as well as in stationary applications such as generators. It is a mixture of propane and butane.
A tank truck, gas truck, fuel truck, or tanker truck or tanker is a motor vehicle designed to carry liquids or gases on roads. The largest such vehicles are similar to railroad tank cars, which are also designed to carry liquid loads. Many variants exist due to the wide variety of liquids that can be transported. Tank trucks tend to be large; they may be insulated or non-insulated; pressurized or non-pressurized; and designed for single or multiple loads. Some are semi-trailer trucks. They are difficult to drive and highly susceptible to rollover due to their high center of gravity, and potentially the free surface effect of liquids sloshing in a partially filled tank.
Fuel dyes are dyes added to fuels, as in some countries it is required by law to dye a low-tax fuel to deter its use in applications intended for higher-taxed ones. Untaxed fuels are referred to as "dyed", while taxed ones are called "clear" or "white".
The fuel economy of an automobile relates to the distance traveled by a vehicle and the amount of fuel consumed. Consumption can be expressed in terms of the volume of fuel to travel a distance, or the distance traveled per unit volume of fuel consumed. Since fuel consumption of vehicles is a significant factor in air pollution, and since the importation of motor fuel can be a large part of a nation's foreign trade, many countries impose requirements for fuel economy.
Hydrocarbon Oil Duty is a fuel tax levied on some fuels used by most road motor vehicles in the United Kingdom; with exceptions for local bus services, some farm and construction vehicles and aviation, which pay reduced or no fuel duty.
The usage and pricing of gasoline results from factors such as crude oil prices, processing and distribution costs, local demand, the strength of local currencies, local taxation or subsidy, and the availability of local sources of gasoline (supply). Since fuels are traded worldwide, the trade prices are similar. The price paid by consumers largely reflects national pricing policy. Most countries impose taxes on gasoline (petrol), which causes air pollution and climate change; whereas a few, such as Venezuela, subsidize the cost. Some country's taxes do not cover all the negative externalities, that is they do not make the polluter pay the full cost. Western countries have among the highest usage rates per person. The largest consumer is the United States.
Biofuel is fuel that is produced from organic matter (biomass), including plant materials and animal waste. It is considered a renewable source of energy that can assist in reducing carbon emissions. The two main types of biofuel currently being produced in Australia are biodiesel and bioethanol, used as replacements for diesel and petrol (gasoline) respectively. As of 2017 Australia is a relatively small producer of biofuels, accounting for 0.2% of world bioethanol production and 0.1% of world biodiesel production.
An excise, or excise tax, is any duty on manufactured goods that is normally levied at the moment of manufacture for internal consumption rather than at sale. It is therefore a fee that must be paid in order to consume certain products. Excises are often associated with customs duties, which are levied on pre-existing goods when they cross a designated border in a specific direction; customs are levied on goods that become taxable items at the border, while excise is levied on goods that came into existence inland.
The 2007 gasoline rationing plan in Iran was launched by president Mahmoud Ahmadinejad's cabinet to reduce that country's fuel consumption. Although Iran is one of the world's largest producers of petroleum, rapid increases in demand and limited refining capacity have forced the country to import about 40% of its gasoline, at an annual cost of up to USD $7 billion.
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. Proceeds from the tax partly support the Highway Trust Fund. The federal tax was last raised on October 1, 1993, and is not indexed to inflation, which increased 111% from Oct. 1993 until Dec. 2023. On average, as of April 2019, state and local taxes and fees add 34.24 cents to gasoline and 35.89 cents to diesel, for a total US volume-weighted average fuel tax of 52.64 cents per gallon for gas and 60.29 cents per gallon for diesel.
The main fuel tax in Australia is an excise tax, to which Goods and Services Tax ("GST") is added. Both taxes are levied by the federal government. In Australia the GST is applied on top of the fuel excise tax. In some cases, businesses may be entitled to exemptions or rebates for fuel excise tax, including tax credits and certain excise-free fuel sources.
In Canada, motor vehicles are primarily powered by gasoline or diesel fuel. Other energy sources include ethanol, biodiesel, propane, compressed natural gas (CNG), electric batteries charged from an external source, and hydrogen. Canada, like most countries, has excise taxes and other taxes on gasoline, diesel, and other liquid and gas motor fuels, and also taxes electricity at various administrative levels. Most provinces and territories in Canada also have taxes on these motor fuels, and some metropolitan areas such as Montreal, Greater Vancouver, and Victoria impose additional taxes.
The use of biofuels varies by region. The world leaders in biofuel development and use are Brazil, United States, France, Sweden and Germany.
A gasoline pump or fuel dispenser is a machine at a filling station that is used to pump gasoline (petrol), diesel, or other types of liquid fuel into vehicles. Gasoline pumps are also known as bowsers or petrol bowsers, petrol pumps, or gas pumps.
A fuel container is a container such as a steel can, bottle, drum, etc. for transporting, storing, and dispensing various fuels.
Member States shall exempt the following from taxation... energy products supplied for use as fuel for the purpose of air navigation other than in private pleasure-flying