Energy prices continue to rise, which is one of the consequences of the war in Ukraine. And if we take fuel for example, its price includes several variables that we will detail in the following lines.
If a liter of fuel costs about 2 euros, what is its price made up of? What do we pay and why?
First, there is a fixed tax per liter: that is the excise duty. You pay a fixed amount of 60 cents per liter per liter of fuel. It is the most important tax on fuel.
To this must be added the costs of distributing the petrol, ie the costs of storing it in Belgium, transporting it to the pump and the costs of operating this pump. These are also fixed costs, negotiated between the Belgian State and the Petroleum Association through a program contract.
And then there are the production costs, i.e. extraction, transport and processing. These costs are determined by the exchange listings of petroleum products for the ARA zone (Amsterdam, Rotterdam, Antwerp). These costs have risen sharply. Today it accounts for 42% of the price of gasoline. Or if we round up to €2 per liter, you pay €84 cents per liter to arrive in Belgium.
There are still a few cents to get to 2 euros
VAT must also be taken into account. As everyone knows, it’s 21% and it logically refers to production, to distribution. It’s logic. But also on excise duties, i.e. a tax on a tax… Which is legal, but undoubtedly intellectually questionable. This is no exception, as this principle also applies to the sale of alcohol.
Finally, excise duties and VAT account for just over 50% of the price of a liter of fuel. An amount returned to the state budget, especially for social security.
We’re talking about it more and more because of the rise in fuel prices, but what do these ‘excise taxes’ mean in practice?
We have taxes that are referred to as “direct”, which are the taxes payable specifically on a citizen’s or a company’s income, and the “indirect” taxes levied on the occasion of a specific act or fact. These include registration fees, inheritance and value added tax, sales tax and excise duties.
These excise duties apply to the consumption or use of certain products, whether they are manufactured domestically, whether they originate from a member state of the European Union, or whether they are imported into the European Union from a third country.
And which products are subject to excise duty?
Three families of products are subject to it: energy products, including electricity, alcohol and alcoholic beverages, and tobacco products.
And does it all count in the state budget? Yes, because consumption taxes make up almost a third of VAT revenue at around 9 billion euros.