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Concept
Fuel tax
Summary
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.
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.
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.
Official source
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