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How much tax do I pay for every liter of gasoline?

How much tax do I pay for every liter of gasoline?

Two weeks ago, I wrote a post about how much tax I actually pay for every euro earned. If you’ve missed this post, just take a look here. Taxes are a hot issue here in The Netherlands right now, because it is tax season. Therefore a lot of people are talking about taxes, or must I say, complain about their taxes.

I couldn’t keep away from some discussions and I was talking about taxes, when a colleague said that we really pay a lot of taxes on gasoline. He couldn’t tell me how much, but he was convinced it was more than 50% he said. This made me curious and I did my own little research.

www.polliesdividend.com pollie gasoline dividend

My frequent readers know that I really love Royal Dutch Shell and therefore an old-fashioned photo of a Shell gas station 😆

 

Taxes

Okay, lets dropped the bomb immediately. More than half of what you pay for gasoline goes to the central government in the form of excise duties (Dutch: Accijns) and Value Added Tax (VAT). Most of that VAT is levied on excise duty, which accounts for more than half of the fuel price. Thus, actually you pay taxes on taxes. Through these taxes you pay for the use of a car: if you do not drive, you do not buy fuel.

 

Excise duty

This is a fixed government levy. Excise duty or consumption tax is a form of indirect tax, which is levied on the sale of certain (consumable) goods. In the Netherlands excise duties are mainly on alcoholic drinks, soft drinks, tobacco and fuels. Excise duty is generally levied on the quantity of the product and not on its value. This is in contrast to, for example, VAT, value added tax. For excise goods, VAT is levied on the total amount including the excise duty.

The primary purpose of excise duties is to provide income to our government. A second goal is to discourage the use of certain things. The Netherlands raises excise duties of around 12 billion euros annually. The main excise duty comes from gasoline and mineral oils, followed by tobacco.

The fixed amount of Excise duty per liter on gasoline is around 80 cents in 2020. Those rates go up with an inflation correction every year. Good to know is that apart from that annual correction, excise duty does not participate in fuel price fluctuations.

 

Production costs

The production costs of gasoline are about 29% of the total amount at the pump, according to ANWB. This amount can fluctuate, because it is partly determined by the price of crude oil.

 

Distribution and trade margin

After some research and some calculations, I have found out that about 6% – 10% of the total amount is profit, both for the oil company and for the pump holder. The latter pays a fixed amount per liter to the oil company, so he pays promotional prices from his own pocket.

 

One liter of gasoline

My car runs on E10 gasoline and last week when I filled up my tank, I have paid € 1,57 euro per liter. So, let’s break down this price.

Production cost 0,41
Distribution and trade margin 0,09
Excise duty 0,80
VAT 0,27
Total consumer price 1,57

 

Conclusion

Nothing is as variable as fuel prices. Every day there is a different liter price on the pillars at the gas stations throughout the Netherlands. But now I know that the oil companies and the owner of the gas station is not getting very rich by it. Most of the money you pay for a liter of gasoline (68%) goes to the Dutch Government.

I was a little bit shocked at first. But then I thought about all the good things we are getting in return. The government is building bridges and roads from our tax money. It is also used to build hospitals and to pay doctors, police officers, teachers and civil servants.

If I think about this, especially with the corona outbreak going on, I don’t mind paying taxes at all.

What do you think about taxes? And how much taxes do you pay in your country for every liter of gasoline? I like to hear from you!

Cheers

Pollie

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2 thoughts on “How much tax do I pay for every liter of gasoline?

  1. Uitklokken

    You mention good things that are being done with taxes, but there are also many bad (or noneffective) things happening with taxes.
    It always baffles me that a lot of people complain about taxes, but are a bit complacent about whether it’s spent well.
    Besides that, paying taxes on taxes is a great invention. It’s also used on alcoholic beverages in the Netherlands 🙂

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