Armstrong Economics Blog/Energy
Re-Posted Aug 25, 2017 by Martin Armstrong
Government first imposed taxes on alcohol and cigarettes under the claim that they were trying to make people stop for their own good. But as always, as the governments became addicted themselves to the tax revenue, then they looked to tax soft drinks in Philadelphia to prevent people from drink too much sugar, and New York tried to them impose a tax on electronic cigarettes. In New York, the Democratic Governor Andrew Cuomo lived up to the Democratic motto – tax everything. Only the fact that the GOP-controlled Senate in New York, the Republicans rejected Cuomo’s plan to tax the liquid used in electronic cigarettes. Government always pretends to be raising taxes to help people, but it is always a huge lie.
Now all the fuss over the environment and the push to electric cars has a tremendous problem in cities such as how does someone pug in their car when they live in a tall apartment building? But the other side of this coin is the same problem governments have faced with declining revenues from cigarettes.
It seems that nobody publishes a simple statistic to reflect how much taxes on fuel represents in the total budget of the European Union. There is plenty of information on how much tax on fuel countries charge. But when it come to how addicted government is on those fuel taxes seems to be something nobody wants to reveal.
Average price of oil for the last 20 years is 0.98 Euro per litre. In the EU average consumption of petroleum is 12,530,000 barrels a day in 2016. Therefore, taking this very low average price we arrive at the following:
1 BBL = 158.99L
Therefore multiplying this together we get the amount of litres of consumption of petroleum products per day.
Multiply this by 365 to give the yearly total
Multiplying this by 0.98 (conservative figure of the average price of oil for the last 20 yrs)
712,590,159,190 Euros of sales of Petroleum.
Multiplying this by the average tax rate of approximately 60% of the pump price is taxation, we then arrive at EU countries recoup approximately 427,554,095,514 per year in TAX revenues from fuel. Now let is take that as a percentage of total tax revenue in the EU and we arrive at 427,554,095,514 TAX on petroleum products within 5,877,506,000,000 in total 2015 Tax revenues of all 28 member states, and we finally arrive at 7.27% of total TAX revenues.
The cost of going Green to the state budgets is going to be huge. This will lead to tax hikes in other areas to make up the shortfall. Then add the rise in interest rates and we are looking at the next 4 to 5 years of a true crisis in funding government. We can expect electricity to rise in taxation dramatically and this will impact people in their apartments in cities who do not even own a car.