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Primark

In: Business and Management

Submitted By SarahP
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Pages 2
Energy transition

Exercise 3
Fuel prices
Dollars/litre, 2014 | Price | Price without tax | France | 1.996 | 0.847 | Germany | 2.093 | 0.887 | Italy | 2.329 | 0.936 | Spain | 1.878 | 0.932 | Great Britain | 2.158 | 0.830 | Japan | 1.641 | 0.972 | USA | 0.921 | 0.809 |
Source: AIE
a) Comment on the weight of taxes on total fuel prices in these countries
Share of the taxes on fuel prices

There is substantial variation. Generally, in countries that are members of the European Union, the tax is an average of 57.4% of the price, while in Japan it is around 40%, and in the US it is the lowest. Clearly in most of these countries, fuel prices are heavily determined by taxes
b) What could be the reasons for these taxes?
The big gap between the European countries and Japan relative to the US in terms of fuel price taxation is linked to the fact that these countries are net importers of fuel. As a consequence, the governments incur in a deficit, as they are in charge of importing oil and gas. The high tax on fuel prices contributes to making up for that deficit. In parallel, the fuel taxes can help discourage the use of fuel cars so as to foster the use of cars that are based on cleaner energies.
c) Can they be effective, given that oil consumption is difficult to reduce?
Regarding the aim of taxes to discourage the use of oil and gas, yes, they can be if there are other incentives/benefits to switch to cleaner cars and if cleaner cars are easily

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