The Diesel Differential

Abstract

The diesel differential: differences in the tax treatment of gasoline and diesel for road use Diesel and gasoline account for around 95% of energy used for road transport in the OECD and for the largest share of revenue from taxes on energy. In 33 out of 34 OECD countries, diesel fuel is taxed at lower rates than gasoline both in terms of energy and carbon content. To assess whether this difference is warranted from an environmental perspective, this paper examines the rationales for taxing both fuels, considering the externalities (including local air pollution, carbon emissions and other social costs related to road transport) associated with the use of each fuel and the fuel efficiency advantage of diesel vehicles. The revenue, distributional and competitiveness consequences of increasing tax rates on diesel are also briefly considered and the revenue effects of the tax treatment of diesel are shown to be significant. We conclude that the externalities associated with each fuel show that the lower tax rates that currently apply to diesel fuel are not justifiable from an environmental perspective. Reduction of the diesel differential is warranted. A gradual approach to removing the differential would allow the adverse distributional and competitiveness impacts to be mitigated during the transitional phase. RÉSUMÉ Avantage fiscal en faveur du gazole : différences de traitement fiscal de l'essence et du gazole à usage routier

Decarbonizing intraregional freight systems with a focus on modal shift

“…Harding [169] finds that in almost all OECD countries, diesel fuel taxes are lower than gasoline taxes. She concludes that the externalities associated with the fuels do not justify this tax differential and advises its gradual removal.…”

“…The US and Canada are among the countries with the lowest motor fuel taxes in the world, equivalent to a carbon price for diesel of US$2.50 or less per tonne of CO 2 [169]. In the US, diesel taxes are lower in states with a larger proportion of employment in the trucking industry [204].…”

The cost of air pollution in Africa

“…South Africa, which will surely be reviewing its experience of limited road-user pricing, might also wish to review the findings of recent OECD research (Harding, 2014;Roy, 2014) detailing the extent of subsidy for company-car usage, and the extent of its contribution to air pollution, in OECD member-and partner-countries: given that the extent of the subsidy in South Africa is very close to the OECD average (Harding, 2014), this particular OECD-recommended reform may prove to be of immediate relevance here. And so on.…”

OCDE - Avaliações de Desempenho Ambiental Brasil 2015

“…As alíquotas desse imposto continuam muito abaixo das médias internacionais, com o diesel ainda tributado por uma alíquota mais baixa do que a da gasolina (Figura 3.3). Essa discrepância, comum na maioria dos países, não tem justificativa ambiental, uma vez que o diesel tem maior teor de carbono e provoca emissões de poluentes atmosféricos locais (Harding 2014 A alíquota do IPI varia de acordo com a capacidade do motor, sendo menor (7%) para veículos motores com até 1000cc. Acima de 1000cc, o IPI varia entre 13% e 25% para veículos movidos a gasolina, e é reduzido para 11% ou 18% para veículos flex (Barros, 2014 Tributos sobre propriedade de veículos são, teoricamente, menos eficientes que tributos sobre combustíveis ou uso de rodovias para a redução de emissões de GEEs e outros poluentes atmosféricos, por terem menor relação com o uso do veículo.…”