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OECD: Declining tax revenue from transport fuel taxes

OECD: Declining tax revenue from transport fuel taxes

The Organisation for Economic Cooperation and Development today issued a report that examines the effects of declining tax revenue from diesel and gasoline used in private cars and whether distance-based charges would help sustain tax revenues as well as have other effects on the environment.


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The OECD report is based on studies of the situation in Slovenia (where 14.6% of total tax revenue collected in 2016 by the central government was from excise taxes and carbon taxes on road transport fuels). According to the OECD report, Tax Revenue Implications of Decarbonising Road Transport - Scenarios for Slovenia, because tax revenue from diesel and gasoline use in private cars is likely to decline substantially in the coming decades, a gradual shift from fuel taxes to distance-based charges could contribute to making tax policy more sustainable. In the OECD report:

  • An analysis considers how tax revenues from transport fuels could evolve over time as more fuel-efficient and alternative fuel vehicles penetrate the vehicle fleet.
  • The simulations show that a moderate kilometre charge on motorways that gradually increases from 0.7 Eurocent/km in 2020 to 4.6 Eurocent/km in 2050 could cover the potential decline of fuel tax revenues. A distance-based charging system would charge per-kilometre driven, instead of the all-you-can-drive access to the road network via a vignette, as currently applies to passenger cars in Slovenia.

According to the OECD, the analysis for Slovenia holds lessons for other countries—in particular those with high reliance on fuel taxes.

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