A blog for my AP Economics class to discuss economics-related current issues and news.
Thursday, October 12, 2006
World Gasoline Taxes
Below is a graph showing the taxes on gasoline in industrialized countries from the NY Times this week: (Source: Greg Mankiw's Blog)
5 comments:
Anonymous
said...
I have traveled to England alot because of family that lives over there and I am always amazed at how high their gas prices are. It makes me realize that we start complaining when gas reaches 2 dollars a gallon, but in most other places gas is much much more expensive. As to why gas is taxed so much more heavily in these countries I can only guess that it is because they cannot produce their own oil and rely heavily on importing it. Anyways its amazing to see the effect that these high gas prices have. I know that in England there are very few SUVs and most people drive very small cars by our standards, that is if they have cars. The train systems there are extremely effective, so some people don't even have cars, and rely solely on other means of transport.
I believe the gasoline tax is so high in those European countries because fewer people are as dependant on personal vehicles so that revenue must be gained by heavily taxing gas. Also, Germany is a very environmental nation, so by increasing the price of gas, the demand for gas decreases, so fewer harmful compounds are released into the atmosphere. There is probably also something to do with the fact that those countries have no oil refinery plants or sources of crude oil so importing all that gas is probably expensive to the companies. -Tyler
The governments in European countries must tax the gas more because they want to support the environment or they want to generate revenue for the nation. Most European countries are very pro-environment and such strong taxes on gasoline would minimize its use and the pollution that the burning of the gas causes. Alternatively because of the infrastructure of Europe places are much closer together making the Common people's in America who commute to jobs, school, etc. on average about 30 min by car demand is much more inelastic than a European's who could alternatively bike the one mile to work. So demand in Europe must be inelastic from another source for the government to be willing to charge such high taxes. Perhaps businesses that require gasoline for transportation or running machinery have a very inelastic demand for it. Since this inelastic group would be much smaller than the commuters of America most European countries probably levy the tax to support the environment.
European countries, and I assume Japan and Canada as well, impose high taxes on gasoline to encourage fuel-efficient technologies and fund public transportation. Taxes on gasoline here are so low it is ridiculous; Europeans just shake their heads when Americans complain about paying prices that are half those in Europe. Most of the country's leading economists, including Alan Greenspan, support a sharp hike in the gas tax here. It would help raise government revenue, as well as reduce dependence on foreign gasoline and encourage conservation. However, as long as the American public remains so opposed to gas prices that are high only relative to those we are used to, no policy makers will take up the issue if they have any interest in keeping their political career alive.
I agree with all of the previous points made that the gas tax is higher in Europe due to attempts at conservation and also a more limited and mostly foreign supply of oil. It seems logical, and probably judicious, that European countries, which have a smaller land area than the US and accordingly a lesser dependency on highways, would find gas one of the better commodities to tax highly, since, as Andrew said, such taxes would not induce the kind of public outcry which they would in America. But I must also wonder why, since Europeans are more flexible in their means of transportation, European governments would find a higher revenue in taxing gas than other goods, because demand for it would ultimately be more elastic. Perhaps this is the reason why their tax is so astronomically high--it must be in order to raise sufficient revenue (less gas consumed and a large tax could have the same result as more gas consumed/more inelastic demand, as in the States, and a smaller tax).
(Source: Greg Mankiw's Blog)
5 comments:
I have traveled to England alot because of family that lives over there and I am always amazed at how high their gas prices are. It makes me realize that we start complaining when gas reaches 2 dollars a gallon, but in most other places gas is much much more expensive. As to why gas is taxed so much more heavily in these countries I can only guess that it is because they cannot produce their own oil and rely heavily on importing it. Anyways its amazing to see the effect that these high gas prices have. I know that in England there are very few SUVs and most people drive very small cars by our standards, that is if they have cars. The train systems there are extremely effective, so some people don't even have cars, and rely solely on other means of transport.
-james c
I believe the gasoline tax is so high in those European countries because fewer people are as dependant on personal vehicles so that revenue must be gained by heavily taxing gas. Also, Germany is a very environmental nation, so by increasing the price of gas, the demand for gas decreases, so fewer harmful compounds are released into the atmosphere. There is probably also something to do with the fact that those countries have no oil refinery plants or sources of crude oil so importing all that gas is probably expensive to the companies.
-Tyler
The governments in European countries must tax the gas more because they want to support the environment or they want to generate revenue for the nation. Most European countries are very pro-environment and such strong taxes on gasoline would minimize its use and the pollution that the burning of the gas causes. Alternatively because of the infrastructure of Europe places are much closer together making the Common people's in America who commute to jobs, school, etc. on average about 30 min by car demand is much more inelastic than a European's who could alternatively bike the one mile to work. So demand in Europe must be inelastic from another source for the government to be willing to charge such high taxes. Perhaps businesses that require gasoline for transportation or running machinery have a very inelastic demand for it. Since this inelastic group would be much smaller than the commuters of America most European countries probably levy the tax to support the environment.
- Chip
European countries, and I assume Japan and Canada as well, impose high taxes on gasoline to encourage fuel-efficient technologies and fund public transportation. Taxes on gasoline here are so low it is ridiculous; Europeans just shake their heads when Americans complain about paying prices that are half those in Europe.
Most of the country's leading economists, including Alan Greenspan, support a sharp hike in the gas tax here. It would help raise government revenue, as well as reduce dependence on foreign gasoline and encourage conservation. However, as long as the American public remains so opposed to gas prices that are high only relative to those we are used to, no policy makers will take up the issue if they have any interest in keeping their political career alive.
I agree with all of the previous points made that the gas tax is higher in Europe due to attempts at conservation and also a more limited and mostly foreign supply of oil. It seems logical, and probably judicious, that European countries, which have a smaller land area than the US and accordingly a lesser dependency on highways, would find gas one of the better commodities to tax highly, since, as Andrew said, such taxes would not induce the kind of public outcry which they would in America. But I must also wonder why, since Europeans are more flexible in their means of transportation, European governments would find a higher revenue in taxing gas than other goods, because demand for it would ultimately be more elastic. Perhaps this is the reason why their tax is so astronomically high--it must be in order to raise sufficient revenue (less gas consumed and a large tax could have the same result as more gas consumed/more inelastic demand, as in the States, and a smaller tax).
-Nicole
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