Scenarios on a fresh hike in fuel consumption levy putting the market on edge

Fuel traders in Greece are irate at the proposals being considered regarding a new hike in the special consumption tax on gasoline and diesel.

Official data compiled by the European Commission show that Greece has the fourth highest tax burden on unleaded gasoline (0.67 euros per liter), only trailing Britain, the Netherlands and Italy, and a much higher tax than a number of countries with a greater per capita income, such as Germany, France and Belgium.

A possible increase of the special consumption tax on fuel by 10 cents per liter – a measure on which the government and the country’s creditors see eye to eye – is being considered as a part of the solution toward bridging the fiscal gap. However, the federation of fuel station owners stresses that such a hike would result in a retail price increase of 12.3 cents per liter, as the tax is also taxed with the value-added tax (23 percent)! That should take the average rate from under 1.35 euros per liter to over 1.46 euros/lt for unleaded gasoline.

A scenario that emerged over the weekend that foresees the leveling of the tax on diesel with that of gasoline is deemed even worse, although it does not appear to form part of talks with the creditors. That would increase the cost of diesel by 0.48 euros per liter, to 1.42 euros/lt on average.