4. Taxing Vehicle Use
Taxes related to the ownership and usage of vehicles were introduced in most OECD countries in the first half of the 20th century and have become an important source of tax revenue for many governments. All member countries rely on a range of tax instruments to ensure significant revenue from both private and commercial vehicle owners and road users. Vehicle and vehicle usage taxation in its widest definition represents a prime example of the use of the whole spectrum of consumption taxes for taxing vehicles and their use, including VAT as well as ad quantum or ad valorem taxes (see definitions in Chapter 3). These taxes have progressively been adapted to influence consumer behaviour and curb transport externalities, in particular environmental externalities.
Taxes and charges on vehicles include:
Taxes (including VAT and retail sales taxes) on the purchase and registration of motor vehicles, payable once at the time of acquisition and/or first putting into service of a vehicle (see Annex Table 4.A.1).
Periodic taxes payable in connection with the ownership or use of the vehicles (see Annex Table 4.A.2).
Taxes on road fuels (see Annex Table 4.A.3 and Annex Table 4.A.4).
Taxes on aviation fuels (see Annex Table 4.A.5)
Any other taxes and charges that are directly or indirectly connected with the use or ownership of vehicles, such as import duties, insurance taxes, road tolls, distance charges, congestion charges, company car taxation, passenger transport taxes, etc. (these taxes are not covered in this publication).
The sale and use of motor vehicles generate considerable VAT or retail sales tax revenues. These taxes are levied on the import and sale of vehicles (in the latter case by application to the full selling price or, for used cars, to the margin between the buying and the selling price). VAT or retail sales tax will generally also apply to general maintenance and running costs. In addition, they are levied in most cases on the final duty-paid value (e.g. VAT on fuel is levied on the excise-inclusive price - see Annex Tables 3.A.3 and 3.A.4 in Chapter 3).
Taxes on vehicles reflect a variety of influences beyond the obvious need to raise revenue. Geographic, industrial, social, energy, transport, urban and environmental policy considerations have all had an influence on the level and structure of taxation. Many taxes on vehicles were instituted in a time when cars were considered luxury items. Wider ownership of cars in recent decades has reduced the progressivity of those taxes (many low-income households have at least one car today). Currently, taxation schemes are increasingly used to influence consumer or business behaviour. Energy and environmental considerations have led to an adjustment of taxation according to the fuel efficiency of vehicles, CO2 and polluting emissions. Taxes on road use have also been introduced to manage the external cost of transport and raise additional revenue.
In most countries total taxes on vehicles result from a combination of one-off (on purchase or import) and recurrent (on ownership or use) taxes as well as from a mix between ad valorem (on the price) and ad quantum taxes (taking into account polluting emissions, weight, engine power, number of axles, age, fuel efficiency, equipment, suspension, cylinder capacity, number of seats, type of fuel, electric propulsion and distance covered).
Taxes on the sale/registration and use of motor vehicles (Annex Table 4.A.1 and Annex Table 4.A.2) cannot be considered in isolation from other tax bases and rates. A number of other elements should also be taken into account when considering the taxation of vehicles such as insurance premium taxes, specific road tolls (bridge or motorway tolls, congestion charges, distance charges), fuel taxes, energy taxes and a number of direct tax components such as the personal tax treatment of company cars (Harding, 2014[1]).
4.2.1. The nature and level of taxes on motor vehicles vary widely between OECD countries
Taxes on purchase and registration
All OECD countries levy taxes on purchase and/or registration of motor vehicles. These taxes may include VAT, sales taxes, excise duties and other fees and charges associated with the registration of a vehicle. These taxes may vary considerably from one country to another (see Annex Table 4.A.1). They are based on a large diversity of criteria or on a combination of these criteria. There are five main criteria against which the tax can be assessed:
Environmental impact, incl. polluting emissions, CO2 emissions and the type of fuel used;
Social considerations incl. preferential treatment of emergency vehicles, ambulances, vehicles for disabled people, vehicles for public transport, etc.;
The use of the vehicle including specific criteria applying to commercial vehicles such as number of axles, cargo room, number of seats, etc.
A number of specific elements can further be taken in consideration for determining the tax burden, such as weight, presence of safety equipment, air conditioning, etc. A specific tax applies to tyres in the United States. Taxation depends on the age of the vehicle in several countries.
The burden of these taxes varies considerably from one country to another and may differ between states, provinces, cities or regions within a country. For example, a VAT rate of 10% and a 3% acquisition tax apply in Japan whereas a 25% VAT and a registration tax up to 150% is applied in Denmark. However, these amounts are most often adjusted according to the environmental performance of the vehicles (see Section 4.4 below).
The international differences in taxation of sales and registration of motor vehicles do not give rise to considerable cross-border shopping as motor vehicles need to be registered with a unique identification number in the principal country of use. Similarly VAT levied on the importation of a vehicle (or on its "acquisition" for cross-border sales within the EU) will generally be due in the country of registration. Even in the integrated market of the EU there has been no harmonisation or even approximation of taxes or tax rates on motor vehicles.
Nevertheless, motor vehicle taxation can affect the functioning of the motor vehicle market. This may notably be the case for registration taxes. Generally, registration tax paid in the country of first registration is not paid back when a car is transferred from one country to another (e.g. when the owner moves from one country to another). When registration tax has to be paid (again) in the country of destination where the car is to remain permanently, double taxation occurs. In addition, large differences in tax systems reinforce car market fragmentation. Cars marketed in one country with specifications designed to meet the national tax structure (e.g. brackets of fiscal horsepower, tax policy regarding diesel) are imperfect substitutes and may not effectively compete with cars sold in another country with different tax requirements. Also pre-tax prices appear to be influenced by tax considerations. Significant tax differentials may encourage consumers in some cases to buy cars in countries where registration taxes are very high and where car manufacturers tend to offer lower prices net of taxes by compensation and import and register them in their own country. This may undermine the benefits that should derive from a competitive market for both consumers and industry.
Periodic taxes on ownership or use
All OECD countries levy taxes on ownership or use of motor vehicles, or both. These taxes include recurring charges levied on the right to drive on public roads, usually in the form of an annual motor tax (see Annex Table 4.A.2). Taxes on the operation of motor vehicles also include excise duties on fuel (see Section 4.3 below) and motorway charges or other road user tolls and motor fuel taxation (see Section 4.4. below). Recurring taxes on the ownership of motor vehicles can take many forms. The main elements used to assess these kinds of taxes are very similar to those used for assessing taxes on sale and registration such as use (commercial or not), vehicle type, type of fuel, engine size, age, emissions of pollutants and fuel efficiency.
As for taxes on sale and registration of motor vehicles, the level of taxes on the ownership or use of motor vehicles varies widely between OECD countries. In about one third of these countries (13 out of 37 i.e. Australia, Belgium, Canada, Chile, Colombia, Japan, Mexico, Netherlands, Poland, Portugal, Spain, Switzerland and the United States) local taxes are levied on ownership or use of motor vehicles. Preferential treatment is given in many countries to emergency vehicles, ambulances, vehicles for disabled people, vehicles for public transport or use by public authorities, diplomats, etc. Rebates and exemptions based on environmental criteria are provided in two thirds of OECD countries (see Section 4.4. below).
4.3.1. Taxation of road fuels
The revenues raised from these taxes are significant in OECD countries, as a result of the considerable level of consumption and high tax rates in many of these countries. Although there are large differences between countries, the level of taxation for fuel relative to the base is very high compared to other taxes within the overall economy. For premium unleaded gasoline, for instance, the total tax burden (mainly excise plus VAT) exceeds 100% of pre-tax prices in all the OECD countries, except Australia, Canada, Colombia, Chile, Japan, Mexico, New Zealand and the United States (Annex Table 4.A.3). The lowest percentage of taxes in the consumer price for unleaded gasoline are recorded in Mexico (13.8%), the United States (18.6%) and Colombia (22%). The highest rates are recorded in Finland (65.4%) and the Netherlands (64.9%). Only one country, Colombia, applies a reduced VAT rate to road fuels.
Excise levels for diesel fuel (Annex Table 4.A.3) are still lower than those for gasoline in all OECD countries, except Australia, Belgium, and the United Kingdom where the rates are the same and Switzerland where the excise duty on diesel is higher than the one applied to gasoline. From an environmental point of view, this is peculiar, as diesel consumption in vehicles has a much greater environmental impact than unleaded gasoline, largely due to the significant differences in nitrogen oxides (NOx) and particulate emissions. With more stringent motor vehicle regulations, the difference is becoming less pronounced for new vehicles, although there are concerns about differences between test cycle and on-road performance and the stock of vehicles is still weighted toward older, more polluting diesel vehicles.
In the European Union (EU), the Energy Taxation Directive (2003/96/EC) sets out common rules for the taxation of energy products in EU Member States. This Directive aims to reduce distortions of competition between mineral oils and other energy products, as well as tax competition between member states from rate differentiation in energy taxation. It also aims to incentivise more efficient energy use. The Directive sets common taxation rules for a range of fuels, including many oil products, coal and natural gas, and for electricity consumption. For each, it sets a minimum level of tax expressed in terms of the volume, weight, or energy content of the fuel. For example, minimum rates on road fuels are as follows: EUR 0.359/l for unleaded gasoline; EUR 0.330/l for gas oil and EUR 0.125/kg for LPG. The Directive does not specify which taxes should be used to reach the minimum level of taxation. These may include a diversity of specific taxes such as excise, carbon tax, energy tax, etc. This directive is currently being revised as part of the general review of climate-related legislation of the Green Deal.
Excise taxes on transport fuels are usually much higher than on mineral oils and, more generally, than on fossil fuels used in other sectors (OECD, 2013[2]). This can be for various reasons, including a lower elasticity of the tax base in transport; the use of excises to cover (more or less directly) external costs that are relevant only in the transportation context (most notably congestion); and equity concerns. Equity considerations have notably motivated the differences in taxation of diesel used for household heating compared to diesel used for transportation (Flues and Thomas, 2015[3]). The vast majority of OECD countries (except Greece, Hungary, Israel and the Netherlands) tax heating oil for households at a lower rate than diesel for transport use even though both products are more or less identical (see Annex Table 3.A.8).
Excise rates on automotive fuels should not be considered in isolation when assessing the overall tax burden on automotive transport (van Dender, 2019[4]). Vehicles may also be subject to distance-based taxes, parking taxes, road tolls, registration taxes and recurrent circulation taxes and many countries differentiate those taxes according to the type of fuel used or according to CO2 emissions per unit distance (see Section 4.4 below). Furthermore, the tax treatment of company car use is often more favourable – sometimes considerably so – than that of other car use (Harding, 2014[1]).
4.3.2. Taxation of aviation fuels
This section describes the VAT and excise taxes applied to the two main categories of fuels destined to aircrafts, i.e. JET A-1 fuel used in turbine engines and AVGAS used in piston-engine aircrafts. Annex Table 4.A.5 shows the excise and VAT rates applied to these types of fuels (hereafter “aviation fuels”) in OECD member countries and, where applicable, other specific taxes on the provision of those fuels to aircrafts (e.g. carbon tax).Other taxes applied to air transport (ticket taxes, airport taxes, etc.) are not covered in this publication.
The provision of aviation fuels to enterprises operating aircrafts for international commercial flights (i.e. passenger transport or cargo) is subject to a zero rate of VAT in all OECD countries or subject to a full refund of input VAT (Chile), except Colombia, where it is subject to the reduced VAT rate of 5% and the United States where there is no federal VAT. By contrast, the provision of aviation fuels for domestic commercial flights is subject to VAT in all OECD countries (except in the United States) at the standard VAT rate, except for Colombia where it is subject to the reduced VAT rate of 5%. Since aviation fuel will typically be a business input of an enterprise large enough to be registered for VAT, this component of tax will generally be fully deductible and thus ultimately have no economic impact. The provision of aviation fuels for domestic non-commercial or pleasure flights is taxed at the standard VAT rate in all OECD countries, except Colombia where it is subject to the reduced VAT rate of 5% and the United States, where it is taxed at the state level, with rates varying across them. In theory, the VAT zero-rating of aviation fuel for international flights reflects the objective of relieving exports from VAT in the jurisdiction of origin so as to avoid double taxation in the jurisdiction of destination, which normally has the right to levy VAT on internationally traded goods in accordance with the destination principle. However, unlike most exported items that are normally subject to VAT in the destination country, aviation fuel used in international flights will generally remain untaxed as most of it is consumed during the international flight and the remainder remains generally untaxed in accordance with the International Civil Aviation Organisation (ICAO) Convention (also known as the Chicago Convention; see below) requiring contracting states not to charge duty on aviation fuel already on board any aircraft arriving on their soil from another contracting state (all OECD countries are parties to the Convention).
Excise Annex Table 4.A.5 shows that all OECD countries exempt aviation fuels from excise duties for commercial international flights, in contrast to fuels used on road and rail transport. They also all exempt aviation fuel for domestic commercial flights, except Australia, Canada, Japan, Switzerland and the United States. The landscape is more diverse for aviation fuel used for non-commercial and pleasure flights, which is taxed in 14 countries for international flights (Belgium, Finland, Germany, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Poland, Portugal, Slovenia, Spain and Sweden) and in a majority of OECD countries for domestic flights (in 22 countries out of 37).
Two OECD countries apply other (environmental) taxes to aviation fuels. Norway exempts aviation fuel from excise tax but submits it to a carbon tax and Slovenia applies a surcharge to all aviation fuels (including for international flights) in addition to excise duties (for non-commercial and pleasure flights).
As explained above, the exemption of aviation fuels for international flights in countries of arrival results from the Chicago Convention, which lays down the basic standards and principles governing international aviation. Article 24 of the Convention forbids the taxation of fuel on board aircrafts arriving in the territory of a contracting party. The Convention does however not forbid imposing any taxes on fuel supplied to an aircraft at the point of departure (Faber and O’Leary, 2018[5]) This tax exemption for fuels supplied to aircrafts rather result from the network of bilateral “Air Service Agreements” (ASAs) between individual countries, which generally provide for such an exemption on the basis of reciprocity (Antony Seely, 2019[6]). The Chicago Convention is not applicable to domestic air transport and therefore nothing prevents countries from taxing aviation fuels on domestic flights.
Although excise on transport fuels has been around for many years, it was originally motivated primarily if not exclusively by non-environmental objectives, such as general revenue generation or to finance infrastructure spending in some cases. When the more environmentally-friendly unleaded gasoline appeared on the market, it was not commercially competitive with leaded gasoline as a retail product because it was more expensive to produce. Energy taxation was used to overcome this handicap by making unleaded gasoline cheaper at the pump. Today, leaded gasoline has disappeared and is even no longer allowed on the market. Lower taxes on Liquefied Petroleum Gas (LPG) used as propellant had a much less significant effect on consumer behaviour. The characteristics of this fuel (not liquid at standard temperature and atmospheric pressure; more difficult to stock; need for specifically equipped stations) have hindered its development. The use of LPG is globally very low compared to diesel and gasoline.
Taxation has increasingly been used over the last decades to influence customer behaviour and encourage the purchase of low polluting or more fuel-efficient vehicles. In 2020, all OECD member countries except Chile and Colombia take environmental or fuel efficiency criteria into account when determining the level of taxation for the purchase or use of vehicles (see Annex Table 4.A.1 and 4.A.2). In 21 of these countries, the polluting emissions (CO, NOx, particulate matter per kilometre) or CO2 emissions are taken into account to determine the level of taxation and 24 apply tax rebates or exemptions for electric or hybrid vehicles. A number of EU Member States use the polluting emission norms set by European legislation (Directive 2007/46/EC and subsequent regulations) as a benchmark for their vehicle taxes although there is currently no European rule regarding car taxation. Three OECD countries (Belgium, Japan and Poland) apply rebates or exemptions on taxes on purchase or use of hydrogen fuel cell electric vehicles (FCEVs).
Differentiating motor vehicle purchase/registration taxes according to the fuel-efficiency or polluting emissions (as in 26 out of 37 OECD countries) can give potential vehicle purchasers an immediate incentive to buy a vehicle that pollutes less, is more fuel-efficient, or both. Differentiating annual charges on similar principles (as in 26 out of 37 countries) can also provide such an incentive, but somewhat less directly. Sixteen OECD countries (Austria, Belgium, France, Greece, Iceland, Ireland, Italy, Japan Luxembourg, Mexico, Netherlands, Norway, Portugal, Slovenia, Switzerland and Turkey) apply such differentiation on both purchase/registration and annual taxes. One approach is to estimate vehicles’ usage over their lifetime, and to calculate tax rates based on the estimated tonnes of CO2 a vehicle is estimated to emit over its lifetime. Research in this context show that tax rates applied per tonne CO2 emitted over a vehicle’s estimated lifetime vary significantly between countries (for an in-depth study on this topic, see (Nils Axel Braathen, 2009[7])
High registration taxes are likely to reduce the number of new motor vehicle purchases. However, while this would, at first sight, appear to favour environmental objectives, higher purchase taxes on vehicles can not only reduce the size of the vehicle fleet but also cause some purchasers to defer their purchase or to purchase a used vehicle, increasing the population of older, more polluting, cars.
At the local level, other taxes and charges have been implemented or are considered to reduce local air pollution and other social costs of vehicle usage more generally, particularly in urban areas (Kurt van Dender, 2019[8]) Local traffic emits air pollutants in addition to CO2 emissions, especially fine particulates, which create health damages whose economic costs can be estimated. Expressed per vehicle-kilometre, these external environmental costs of car traffic have been estimated at up to EUR 0.01 (gasoline cars) to EUR 0.037 (diesel cars). Traffic congestion also creates marginal external costs that are estimated to range from EUR 0.30 to EUR 2.42 per vehicle/kilometre when traffic volumes exceed road capacity. Other vehicle transport externalities include traffic accidents (costs estimated at up to EUR 0.03 per vehicle kilometre), noise (up to EUR 0.36/km for heavy goods vehicles in urban areas) and road damage (from EUR 0.05 per vehicle kilometre for cars to 0.52 for heavy trucks). Taxes can efficiently internalise these external costs and ensure their cost-effective reduction (Braathen et al., 2017[9]), provided that they are carefully targeted. While fuel taxes are well suited to reflect external costs from CO2 emissions, distance-based taxes and, to some extent, parking charges have the potential to effectively reflect specific costs such as congestion, road damage and other infrastructure-related costs. Distance-based taxes that take into account vehicle characteristics can also help address air pollution (OECD/ITF, 2019[10]).
The OECD’s Taxing Energy Use publication (OECD, 2019[11]) provides a comprehensive overview of specific taxes on energy for 43 OECD and G20 countries. It shows that these taxes are strongly heterogeneous and are in general too low from an environmental point of view. In all countries covered, fuel excise taxes are the largest component in the average effective energy tax rate. Taxes on road transport are much higher than taxes in other sectors, but they are still too low to cover the external costs of road transportation in many cases. Although it is recognised that well-designed systems of energy taxation encourage citizens and investors to favour clean over polluting energy sources, the politics of carbon pricing often prove to be challenging and too many energy users do not pay the energy and carbon prices needed to curb dangerous climate change, even when comparing carbon price signals against a low-end carbon benchmark of EUR 30 per tonne of CO2.
In addition to tax policies, governments generally operate rules for reducing motor vehicle pollution by imposing technical norms to the car industry and many of the tax systems discussed above define tax bases and rates assuming compliance with the CO2 or polluting emissions standards. For example, in the European Union polluting emissions have been regulated since 1970 and a series of amendments have been issued since then to gradually tighten the limit values. The current norms set maximum emissions of carbon monoxide (CO), Volatile Organic Compounds (VOC), nitrogen oxides (NOx) and particles. These are reflected in the Euro 6 (setting lower emission limits for the registration and sale of new types of cars and vans as of 1 September 2015) and in the Euro VI standards for heavy duty vehicles. Emissions of carbon dioxide (CO2) have also been targeted by the European Commission since 2007 and the EU has put in place a comprehensive legal framework to reduce CO2 emissions from new light duty vehicles as part of its efforts to ensure it meets its greenhouse gas emission reduction targets.
For the tables in annex, references to the ‘European Union and its Member States’ includes the UK as a Member State for January 2020 and as an addition to the Member States (‘Member States and the UK’) for the period 1 February 2020 until the end of December 2020.
Austria. The excise amount of EUR 0.482/l applies to unleaded gasoline with minimum 4.6% biofuel content and sulphur content ≤ 10mg/kg. Otherwise the excise duty is EUR 0.515/l.
Canada. The excise rate includes federal and provincial taxes (the federal excise rate is CAD 0.1 per litre). The federal GST rate is 5%. The volume weighted GST/HST rate including the provincial component was 10.69% and the volume weighted GST/HST retail sales tax rate was 12.14%. Municipal taxes and carbon pollution pricing are not included in the excise taxes.
Chile. The Fuel Price Stabilisation Mechanism (Mecanismo de Estabililización de Precios de los Combustibles - MEPCO), introduced in 2014 by Law 20.765 has incorporated a variable component to the excise. In order to stabilise consumer price where there are international market price variations, this mechanism operates weekly either as a tax or as a tax credit. The excise is not included in the VAT base.
Colombia. From 1 May 2019 onwards, the VAT rate of 5% applies instead of 19%
Denmark. The excise amount is for fuel with a minimum amount of 4.8% of biofuels. It includes the Excise Tax, the Environment Tax and the NOx Tax.
Finland. The excise amount for premium unleaded gasoline includes taxes of energy and CO2 components and strategic stockpile fee of EUR 0.0068/l.
France. Tax rate is reduced by EUR 0.01/l in Corsica. An additional tax of max. EUR 0.0073/l is applied by region councils (except in Corsica) to finance sustainable, railway or river navigation substructure. In addition, in the Ile-de-France region, tax rate is inflated up to EUR 0.0102/l.
Germany. The excise amount is for unleaded gasoline with sulphur content ≤ 10mg/kg. Otherwise the excise amount is EUR 0.6698/l. From 1 July to 31 December 2020 the VAT rate is reduced from 19% to 16% to offset the economic impact of the Covid-19 pandemic.
Hungary. Excise amount depends on the world market price of crude oil. If the world market price of crude oil is higher than 50 USD/barrel the excise amount is HUF 122.674/l (including the excise duty of HUF 120/l and the strategic stock fee of HUF 2.674/l). If the world market price of crude oil is 50 USD/barrel or less the excise amount is HUF 127.674/l (including the excise duty of HUF 125/l and the strategic stock fee of HUF 2.674/l).
Iceland. Since this country is not member of the IEA or the EU, price data is taken from European Automobile Manufacturers Association. The excise rate of ISK 82.35/l includes the general excise on petrol (ISK 28.05/l), the special excise (ISK 45.02) and the carbon tax (ISK 9.2/l).
Ireland. The 'Ex-tax price' includes a National Oil Reserves Agency (NORA) levy which is charged at a rate of EUR 0.02 per litre. From 9 October 2019 the ‘Excise’ rate on unleaded gasoline increased to EUR 0.602 per litre.
Japan. This amount includes the Gasoline Tax (JPY 48.6/l), the Local Gasoline Tax (JPY 5.2/l) and the Petroleum and Coal Tax (JPY 2.8/l). The prices and taxes are given for the Tokyo prefecture.
Mexico. There are no excise duties on volume. A tax (Impuesto Especial sobre Producción y Servicios) is charged as a percentage of the value of the product at wholesale level. It is included in the ex-tax price.
Netherlands. For gasoline a stockpiling tax of 0.008/l applies, this is not included in the mentioned excise rate.
New Zealand. The excise amount includes the National Land Transport Management Fund excise tax, the Accident Compensation Commission Levy, the Petroleum or Engine Fuels Monitoring Levy and the Local Authority Fuel Tax.
Norway. The excise amount includes the Excise tax and the CO2 tax.
Poland. The excise amount includes excise tax and fuel charge.
Slovak Republic. The excise amount is EUR 0.514/l for gasoline with biofuel content lower than the minimum of 6.2%.
Slovenia. The excise duty amount of EUR 534.55 per 1000 litres includes: the excise duty of EUR 478.29; EUR 7.36 surcharge on energy end-use efficiency on petrol; EUR 9.11 surcharge for the promotion of electricity generation from renewable energy sources and high-efficiency cogeneration on petrol and EUR 39.79 CO2-tax.
Spain. The excise amount of EUR 0.462/l includes the Excise tax (EUR O.424/l) and the average Regional authorities tax (EUR 0.038/l).
Sweden. The excise tax amount includes the Energy Tax (SEK 3.950/l) and CO2 Tax (SEK 2.620/l).
United States. Average federal and state taxes - there is no VAT
European Union. Directive 2003/96/EC sets minimal excise rates for energy products and electricity
Austria. The excise amount of EUR 0.397/l applies to automotive diesel with minimum 6.6% of biofuel and sulphur content ≤ 10mg/kg. Otherwise the excise amount is EUR 0.425/l.
Canada. The excise rate includes federal and provincial taxes (the federal rate is CAD 0.04 per litre). The federal GST rate is 5%. The volume weighted GST rate, including provincial GST rates, was 10.69% and the volume weighted GST/sales tax rate was 12.14%. Municipal taxes and carbon pollution pricing are not included in the excise taxes.
Chile. The Fuel Price Stabilisation Mechanism (Mecanismo de Estabililización de Precios de los Combustibles or MEPCO, introduced in 2014 by Law 20.765) has incorporated a variable component to the excise. In order to stabilise consumer price where there are international market price variations, this mechanism operates weekly either as a tax or as a tax credit. The excise is not included in the VAT base.
Colombia. From 1 May 2019 onwards, the VAT rate of 5% applies instead of 19%
Finland. The excise includes energy content tax, CO2 tax and strategic stockpile fee EUR 0.0035/l.
France. An additional tax of max. EUR 0.0135/l is applied by region councils (except in Corsica) to finance sustainable, railway or river navigation substructure. In addition, in the Ile-de-France region, tax rate is inflated up to EUR 0.0189/l.
Germany. The excise amount is for unleaded gasoline with sulphur content ≤ 10mg/kg. Otherwise the excise amount is EUR 0.48517/l. From 1 July to 31 December 2020 the VAT rate is reduced from 19% to 16% to offset the economic impact of the Covid-19 pandemic.
Hungary. Excise amount depends on the world market price of crude oil. If the world market price of crude oil is higher than 50 USD/barrel the excise amount is HUF 112.588/l (including the excise duty of HUF 110.35/l and the strategic stock fee of HUF 2.505/l). If the world market price of crude oil is 50 USD/barrel or less the excise amount is HUF 122.588/l (including the excise duty of HUF 120.35/l and the strategic stock fee of HUF 2.505/l).
Iceland. Since this country is not member of the IEA or the EU, price data is taken from European Automobile Manufacturers. The excise rate of ISK -73.25/l includes the excise on diesel (ISK 62.85/l) and the carbon tax (ISK 10.04/l).
Ireland. The 'Ex-tax price' includes a National Oil Reserves Agency (NORA) levy which is charged at a rate of EUR 0.02 per litre. From 9 October 2019 the “Excise” rate for automotive diesel increased to EUR 0.495 per litre.
Lithuania. As of 1st January 2020 there was an increase in excise rate: rate for automotive diesel used for agriculture was set at EUR 0.06/l, normal rate for automotive diesel was set at EUR 0.372/l.
Mexico. Excise taxes on gasoline and diesel in 2015 had three components: (1) the excise-carbon tax, set proportionally to the carbon content of the fuel and implemented through a fixed amount per litre, whose main purpose is to send a carbon price signal to contribute to Climate Change commitments; (2) the excise tax specifically earmarked as transfers to the State’s governments, proportional to their consumption, also implemented as a fixed amount per litre; and (3) the main excise tax, which, changed each month in value according to a set of criteria which essentially subtracted from the fuel’s controlled price the cost of importing or producing fuel, plus the costs of distribution, logistics, related items, and the retail profit for gas station owners. This general excise tax could even become a negative tax (a subsidy) if domestic prices for fuel were low and international reference prices were high, and this was the case for the first 3 years of the decade. The 2016 excise tax reforms changed completely this latter component. Now, the general excise tax on gasoline and diesel is also a fixed quota tax per litre. During the transition period before full price liberalisation of fuels in 2018, the fixed quota of the excise tax will have a complementary quota component (positive or negative) to ensure that the final fuel prices do not vary outside a price band of +/- 3% of the price they had in 2015. This complementary quota can never become equal in size to the excise tax, so general fossil fuel subsidies would be precluded from happening again.
Netherlands. For diesel a stockpiling tax of 0.008/l applies, this is not included in the mentioned excise rate.
New Zealand. The excise tax on diesel is a local authorities’ fuel tax and diesel vehicle owners are also required to pay road user charges.
Norway. The excise amount includes the Excise tax and the CO2 tax.
Poland. The excise amount includes excise tax and fuel charge.
Portugal. Automotive diesel used for agriculture is taxed at a lower VAT rate of 13%.
Slovak Republic. The excise amount is EUR 0.393/l for diesel with biofuel content lower than minimum of 6.9%.
Slovenia. The excise duty of EUR 457.33 per 1000 litres includes the excise duty of EUR 392.72; EUR 8.00 surcharge on energy end-use efficiency on gasoil used as propellant, EUR 9.90 surcharge for the promotion of electricity generation from renewable energy sources and high-efficiency cogeneration on gasoil used as propellant, EUR 46.71 CO2 tax.
Spain. The excise amount of EUR 0.368/l includes the Excise tax (EUR O.331/l) and the average Regional authorities tax (EUR 0.037/l).
Sweden. The tax amount of SEK 4.625/l relates to Class 1 automotive diesel (aromatic content < 5%vol.; max sulphur content of 10 wppm. Higher taxes apply to Class 2 (SEK 4.930/l) and Class 3 (SEK 5.088/l) diesel.
United States. Average federal and state taxes - there is no VAT
European Union. Directive 2003/96/EC sets minimal excise rates for energy products and electricity.
Australia. As part of measures to combat the Covid-19 crisis, the excise tax on jet fuel used in commercial aviation is suspended from 1 February 2020.
Canada. The federal Goods and Services Tax is levied at a rate of 5% on aviation fuel and gasoline used in domestic flights. The federal excise rate, when applicable, is CAD 0.04 per litre of aviation fuel and CAD 0.10 per litre of aviation gasoline. Provinces and territories may also impose additional sales taxes and excise rates over and above the applicable federal rate.
Chile. Commercial services provided by aviation companies (notably, international cargo and/or passenger flights) and services provided to non-residents are considered exports. The aviation companies are therefore entitled to claim the refund of the input VAT, including on the fuel. In those cases, the practical effect can be similar to the application of a zero-rate (for ease of reading of the table, the VAT rate indicated in the table is 0 although in practice it is taxed and refunded to the aviation companies and to non-residents).
Germany. Fuels used for private pleasure flights are taxed at an excise rate of EUR 654,50 /1000 l (JET A-1) and 721 /1000l (AVGAS). From 1 July to 31 December 2020 the VAT rate is reduced from 19% to 16% to offset the economic impact of the Covid-19 pandemic.
Greece. The VAT rate for aviation fuel is 24%. However, in each case the Directive 2006/112/ΕC is applied and a conditional exemption is provided, which is reflected as 0%. For Private/pleasure flights Excise Duties rates for AVGAS (CN code 27101231, 27101270) is EUR 697/1000 litres and for JET A-1 (CN codes 2710 1921, 2710 1925) is EUR 410/1000 litres.
Hungary. Excise amount depends on the world market price of crude oil. If the world market price of crude oil is higher than 50 USD/barrel the excise amount is HUF 126.432/l (including the excise duty of HUF 124.2/l and the strategic stock fee of HUF 2.232/l). If the world market price of crude oil is 50 USD/barrel or less the excise amount is HUF 131.432 (including the excise duty of HUF 129.2/l and the strategic stock fee of HUF 2.232/l).
Ireland. AVGAS used for commercial aviation is partially relieved from excise. The rate of relief is EUR 0.232 per litre giving an effective ‘Excise’ rate of EUR 0.369 per litre.
Netherlands. A zero VAT rate applies to fuels for aircrafts that are used by airlines that are mainly occupied by international transport of persons or goods against remuneration.
Poland. Both fuel charge and excise tax are imposed on aviation fuels. The rate shown in the table includes the excise duty of PLN 1.446/l (JETA-1) and PLN 1.822 (AVGAS) and the fuel charge of PLN 0.17055 per kg). As the national excise rates are expressed in PLN per litre whereas fuel charge rate is expressed per kg, the rate for the fuel charge has been converted into a rate per litre by applying the appropriate density of the fuel.
Portugal. Aviation fuels used for commercial flights (i.e. flights for the transport of goods or passengers for consideration, whatever the type of plane) are exempt from excise duties. Fuels used for pleasure private flights are taxed at an excise rate of EUR 667.29 per 1000 litres for aviation gasoline (AVGAS) and EUR 395.54 per 1 000 litres for jet fuel (JET A-1).
Slovenia. Aviation fuels used for private/pleasure flights are taxed at an excise rate of EUR 330.00 per 1000 litres JET A-1 and EUR 421.61 per 1000 litres AVGAS and CO2 tax EUR 39.79 per 1000 litres JET A-1 and EUR 43.25 per 1000 litres AVGAS. Aviation fuels are also subject to surcharge for the promotion of electricity generation from renewable energy sources and high-efficiency cogeneration in amount EUR 9.11 per 1000 litres JET A-1 and 9.13 per 1000 litres AVGAS.
United States. For commercial aviation, the federal tax rate in the US is USD 0.044 per gallon (€ 0.010 per litre). For non-commercial aviation, kerosene is generally taxed at USD 0.244 per gallon. In addition, states or local authorities can levy additional taxes on aviation fuel varying from USD 0 (Texas, Ohio and Delaware) and USD 0.328 (Illinois) per gallon. There is no federal sales tax; States and local sales rates vary from 0% (Delaware, Montana, New Hampshire and Oregon) to more than 9.5% (Tennessee and Louisiana). As part of measures to combat the Covid-19 crisis, the federal fuel excise tax on jet fuel used in commercial aviation is suspended from 28 March to 31 December 2020.
References
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