European companies face taxes as a percentage of the price of fuel on average 18% higher than the world average, putting them at a serious disadvantage and potentially risking economic growth, shows a new study by UHY, the international accounting and consultancy network.
UHY explains that on average taxes comprise 59% of the cost of the price of petrol and 52% of the cost of the price of diesel, compared to the global averages of 50% and 44% respectively.
Taxes amount to 60% of the cost of diesel in the UK, the highest in the study, and 53% of the cost in Germany.
In many major economies outside of Europe, taxes make up significantly lower proportions of the price of petrol and diesel, including:
- Japan, where 42% of the cost of petrol and 33% the cost of diesel is from tax
- Canada, with taxes making up 35% of the cost of petrol and 32% of diesel
- United States**, where taxes comprise 17% of the cost of petrol and 18% of diesel
Higher fuel taxes means that the cost of filling the tank of a Ford Transit van with petrol in Europe – indicative of a typical business expense – amounts to USD$135 on average. This compares to a global average of USD$111.
UHY explains that higher fuel duties and taxes in Europe are the main contributor to higher fuel prices for petrol, diesel and Liquefied Petroleum Gas.
The cost of filling a tank of a Ford Transit with diesel is 24% higher on average in European countries. As diesel is used in the majority of commercial vehicles, this heavy burden is borne primarily by businesses.
It is also 2% more expensive in Europe for Liquefied Petroleum Gas (LPG), a more environmentally-friendly alternative to petrol or diesel.
Bernard Fay, Chairman of UHY, comments: “Higher fuel taxes hit almost all businesses, and they can ultimately impede economic growth.”
“For any government, taxes on petrol and diesel are a key tool for helping to cut greenhouse gas emissions and can be used to fund infrastructure spending. However, for businesses, especially small and medium enterprises (SMEs), they can represent a significant operating cost, especially in the retail and distribution sectors.”