Current issues related to economy, (responsible) investment, pension and income: every week an APG expert gives a clear answer to the question of the week. This time: chief economist Thijs Knaap on why we do not harmonize national excise legislation in Europe.
The price of a liter of gasoline will go up by 21 cents on January 1, 2024, and the price of a liter of diesel will go up by 13 cents. This is due to new excise tax measures by the outgoing cabinet. Business owners in the border regions are worried; because of the rising excise taxes, the price difference of fuel with neighboring countries continues to increase. “We have the highest excise tax on gasoline in Europe, and therefore also the highest price at the pump. We are already paying 15 cents more for gasoline than Germany and 25 cents more than Belgium. Add these 21 cents and you get enormous differences,” Erik de Vries, director of the trade association for independent pump owners NOVE, told BNR. He believes it would be very welcome if the outgoing cabinet would intervene. “The government must ensure that excise taxes are back in line with the countries around us.” How realistic is this thought?
“The excise tax on fuel in the Netherlands is a fixed amount: 79 euro cents on a liter of euro95. But that is not the only tax. The government also charges 21 percent VAT. That VAT moves with the price, excise taxes do not. They are indexed with the table correction factor,” Knaap explains. The table correction factor is calculated on the basis of the consumer price index figures (cpi) of Statistics Netherlands (CBS). Knaap: “Inflation also plays a role here, and because it was so high a year ago, fuel excise duty, like other taxes, is indexed at the start of the coming calendar year, based on a table correction factor of nearly 10 percent.”
Minimum excise duty rate
This gives the Netherlands the highest excise tax rates in Europe, Knaap confirmed. “There is a minimum excise duty rate in the European Union (EU) of 36 cents, with each country free to levy its own duty above that minimum. This also creates differences between countries. Luxembourg, for example, has a much lower rate than the Netherlands, at 54 cents on a liter of euro95.” But not only excise taxes differ from country to country, so do VAT rates. Knaap: “Luxembourg levies 16 percent VAT; the Netherlands 21 percent. In addition, fuel prices are affected per country by production costs (refining and transport for example, ed.) and market structure (including the degree of competition between gas stations, ed.).”