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Isn't it a no-brainer for administrations? Demand reduction coupled with increased tax revenues. Hello?

Oh but of course, if you are a dyed in the wool tax cutter....

I will be interested to see if those countries with high fuel taxes start to manipulate the tax when base fuel costs rise painfully. When transport costs start to impact the economic viability of major employment providers, it may make sense to forego some of the revenue (which has been rising anyway)

If, however, you have a low tax component, it doesn't give you much room to manoeuvre eg in the States.

You can't be me, I'm taken

by Sven Triloqvist on Sun Oct 8th, 2006 at 06:03:37 AM EST
[ Parent ]
People have been demanding that European governments reduce fuel taxes to protect drivers from oil price increases.

That is emphatically the wrong policy - this is a genuine market signal (even if there is manipulation of market volatility the base price is genuine) and masking them would only make matters worse in the long term.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Sun Oct 8th, 2006 at 06:10:35 AM EST
[ Parent ]
I agree.

Tax manipulation does however have a short term use in stabilising costs for both corporates and homes. It cannot change the long term need for demand reduction/alternative energy needs, but could assist in the transition.

You can't be me, I'm taken

by Sven Triloqvist on Sun Oct 8th, 2006 at 06:19:40 AM EST
[ Parent ]
I don't agree.

The problem is that you can't tax people off car use if you don't give them an alternative. If there is no alternative, they'll simply pay more. This may raise revenue in the short term, but it also has the effect of introducing a rather random car-use tax with random social effects.

While you'll catch the gas guzzlers with this, some people who have to use cars - for example nurses, especially in rural areas - will be unfairly penalised.

A petrol tax only makes sense as part of a wider social transport strategy. Otherwise it's an example of believing in marketism, and the mistaken notion that if you can link a single variable to a single policy factor the wider social effects don't need to be thought through because the invisible hand will magically solve the problem for you.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Oct 8th, 2006 at 12:54:41 PM EST
[ Parent ]
If you want to protect rural nurses, pay them more. If you reduce fuel taxes you reward fuel consumption.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Sun Oct 8th, 2006 at 01:51:33 PM EST
[ Parent ]
The fuel tax in Norway has actually been decreased somewhat over the last couple of years, to shield the politicians from getting booted out in the prior elections.
by Trond Ove on Sun Oct 8th, 2006 at 11:43:23 AM EST
[ Parent ]

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