As Americans have surely noticed, the price paid at the pump has been on an upswing. That said, we pay a much smaller bite in fuel taxes compared to other countries.
The price paid for a gallon of gasoline is influenced by taxes imposed by government – both at Federal (currently at 18.4 cents per gallon) and state levels. The Federal fuel tax funds close to 90% of the Highway Trust Fund, which is the primary financing organization for highway repair, construction and maintenance across the U.S.
The Federal fuel tax is set to expire on September 30. Surely will become a contentious issue in Washington and across the campaigns of 2012 presidential hopefuls. To put our fuel tax price in perspective, it is important to investigate how countries around the world tax their automotive fuels and how much they charge.
Our neighbors to the north pay about $1.20 per gallon in Canadian federal and provincial tax mandates, not including extra taxes imposed by some municipalities such as Vancouver. Over 1/3 of the price paid for gasoline and diesel fuel in Canada is made up by taxes. Fuel taxes charged in Europe vary slightly by country, but on the whole they pay more than double for a gallon of fuel than the US .
Many European countries (such as the UK and Germany) charge an additional value-added tax on fuel at the pump, while other countries like Norway and Sweden even levy a carbon tax on the price of fuel. Over half of the whopping $9.24 paid per gallon of gasoline in France is made up in taxes. A gallon of gas in Germany costs $9.07, $4.88 of which is made up in taxes.
Some countries pay less than Americans do for gasoline through the absence of taxes and even government subsides. Iran, Venezuela, and Kuwait are just some of the countries that subsidize fuel so that their citizens pay little for fuel: prices of gasoline in Venezuela range around 10 cents a gallon! Kuwait, Qatar, Saudi Arabia and Venezuela are all countries where the price paid for a gallon of gas is far less than a dollar and taxes are negative: These governments own most (if not all) of the oil they sell to their citizens, and sadly oftentimes (as is the case in Venezuela) the subsidies that bring low gas to citizens are often funds diverted from public transportation and aid programs. Many of these nations also use low gas prices as a way of legitimizing autocratic rule for their underprivileged national masses.
The increasingly higher prices paid at the pump by Americans for petroleum fuels, coupled with the discussion over government revenue and the soon to expire federal fuel tax make for a hotly debated issue. Prices of petroleum do not show signs of decreasing in the near term, yet without the addition of a Federal gas tax there is currently no way to fund much needed road work and improvements on our nation’s aging highway system. Politicians may debate the relevance of the Federal fuel tax and ways to save money on gas, but it is important to keep in mind that in relation to the rest of the world, America enjoys a very privileged position in the price paid for fossil fuel taxes.
Earthgarage – Greener Car. Fatter Wallet.