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  • 17 percent taxes on gasoline places the US amongst lowest in study
  • European tax rates higher than other major economies including USA and Japan

US companies enjoy some of the lowest taxes as a percentage of the price of fuel in the world – on average 66 percent lower than the global average – shows a new study by UHY, the international accounting and consultancy network.

UHY explains that in the US, on average, taxes comprise 17 percent of the cost of the price of gasoline and 18 percent of the cost of the price of diesel fuel. This compares favorably to the global averages of 50 percent and 44 percent respectively.

Taxes amount to 60 percent of the cost of diesel fuel in the UK, the highest in the study, and 53 percent of the cost in Germany.
In the United States Federal taxes on gasoline average just slightly over 18 cents per gallon, with 60% of all revenue raised spent on highway and bridge construction. Only 27 states currently impose taxes on Liquified Petroleum Gas (LPG).

UHY explains that funds raised from fuel taxes are often used to fund a wide range of initiatives including road and infrastructure improvements as well as education.

In many major economies outside of Europe, taxes make up significantly lower proportions of the price of gasoline and diesel fuel, including:

  • Japan, where 42 percent of the cost of gasoline and 33 percent the cost of diesel fuel is from tax 
  • Canada, with taxes making up 35 percent of the cost of gasoline and 32 percent of diesel fuel
  • United States**, where taxes comprise 17 percent of the cost of gasoline and 18 percent of diesel fuel

Lower fuel taxes means that the cost of filling the tank*** of a Ford Transit van with gasoline – indicative of a typical business expense – in the US amounts to 60.61. This compares to $135 in Europe on average and the global average of $111.

UHY explains that – in contrast to the US – higher fuel duties and taxes in Europe are the main contributor to higher fuel prices for gasoline, diesel fuel and LPG

While the cost of filling a tank of a Ford Transit with diesel fuel in the US is 60 percent lower than the world average, the same cost is on average 24 percent higher in European countries than the rest of the world. As diesel fuel is used in the majority of commercial vehicles, this heavy burden is borne primarily by businesses.

Scott Miller, National Petroleum Group Leader of UHY member firm UHY Advisors in the United States comments: “Lower fuel taxes mean that businesses in the US face a lower burden for a key operating cost that affects almost all businesses. This can ultimately help economic growth.”

“While the price of gasoline can vary across individual states in the US, the trend is clear. The overall level of taxes levied on fuel tends to be lower than that of Europe. That may be a factor, albeit a minor one, behind the US’ strong economic growth.” 

“For smaller and fast-growing businesses, lower taxes on fuel can be especially beneficial, particularly in sectors heavily depended on distribution fleets like retail. The US Government is helping to provide such a business-friendly environment with lower fuel duties.”

“For any government, taxes on gasoline and diesel fuel are a key tool for helping to cut greenhouse gas emissions and can be used to fund infrastructure spending. However, there needs to be a balance to ensure fuel and tax costs do not become prohibitive.”

“The relatively lower rates in major developed economies, most notably the United States, compared to its international competitors in Europe shows that a balance can be struck.”

“Governments can consider initiatives such as freezing fuel duties or even cutting the rates. There needs to be greater international cooperation to ensure there is not too much discrepancy in fuel prices between different countries.”

UHY studied fuel taxes and prices in 24 countries around the world, looking at the cost of gasoline, diesel fuel and LPG and the percentage of the price that came from tax.

France ranked the highest for tax comprising the largest percentage of the total price of petrol – 64 percent. Denmark ranked the most expensive in the UHY study for the overall cost of filling a tank with  gasoline– costing $160.

Filling the tank of a Ford Transit with gasoline – proportion of cost made up of fuel cost and tax (Major economies and world averages)

Filling the tank of a Ford Transit with petrol: breakdown of cost of fuel and tax

Filling the tank of a Ford Transit with diesel: breakdown of cost of fuel and tax

Filling the tank of a Ford Transit with Liquefied Petroleum Gas (LPG): breakdown of cost of fuel and tax

*EU countries
**US figures based on averages across US states
***Tank size: 80 litres for gasoline and diesel fuel, 72 litres for LPG
****Tax rates include VAT, some or all of which may be reclaimed by businesses in some countries, including EU member states