The collection of the tax on fuels confirms a brake on consumption due to the rise in prices

The taxation of fuels was the subject of an intense debate last spring due to the rise in oil prices aggravated by the war in Ukraine. There were multiple proposals to lower it, despite the fact that some of these taxes, such as the special tax on hydrocarbons, do not depend on price but on consumption. Finally, he won the idea of ​​subsidizing the liter with 20 cents and the tax system was maintained. Now, the statistics of this tribute allow us to draw how fuel consumption has evolved so far this year. Its collection barely rises 2% compared to pre-pandemic data, while the set of tax revenues rises 18%, triggered by the effect of inflation.

Two taxes are levied when refueling. The VAT, which is based on the price, and the special tax on hydrocarbons, which affects exclusively for each liter consumed. Thus, the latter serves to monitor the consumption of gasoline and diesel in Spain. Between January and July of this year, the State and the Communities have collected 7,451 million euros. The level is significantly higher than the data for the same period of 2021 and 2020 due to the mobility restrictions that existed due to the pandemic. For this reason, to go to a comparable data, it is necessary to recover that of 2019. At that time, between January and July, 7,247 million were collected.

The Tax Agency itself acknowledges that the growth in collection of this tax in the month of July was "low". "The reason for this behavior is the impact that high prices are having on consumption, particularly on automotive diesel," says the agency's collection report after the first seven months of the year. "The growing evolution of prices has slowed down the progress of consumption," adds the Agency, pointing out that there is a brake on sales caused by the rise in costs.

The statistics show, in fact, that although in 2021 more is collected than in 2019, consumption has decreased. Between January and July, 16,400 million liters of fuel have been sold, compared to just over 17,000 million that were purchased in 2019. Why does the collection rise if less is consumed? The Tax Agency gives the answer in its report: gasoline consumption is growing while automotive diesel "remains below pre-pandemic levels". The tax on hydrocarbons is higher for gasoline than for diesel.

Thus, the collection statistics collected by the Tax Agency serve to draw a context in which fuel consumption is slowed down compared to the period prior to the pandemic. Diesel or professional gas oil still show levels that do not reach those of 2019 despite the fact that the economy and tourism have been recovering throughout the year. Thus, the effect of the bonus for each liter of fuel refueled on consumption would have been reduced.

A recent CaixaBank Research report confirms this reality. "Not all consumers reacted the same to the rise in prices," says the document signed by Josep Mestres. Half of consumers —measured by the use of the entity's cards at service stations— increased their spending on fuel in July, 13% more than in 2019. "Those who already consumed more fuel than the average consumer spent more than before," underlines the study. Likewise, those who already spent less on fuel in 2019 reduced their spending in 2022. The decrease in consumption is greater than that of those who increased their fuel costs.

"The disparity in behavior between levels of consumption was accentuated as a result of the increase in prices", adds Mestres. "In other words, all consumers reacted to the price increase by adjusting their consumption, but not all had the same ability to compensate for the price increase," he emphasizes. Thus, he points out, it is presumable that those who already spent more in 2019 have had less capacity to reduce their spending because it is more essential or have greater capacity to assume the price increase. "However, those who spent less on fuel reduced their consumption more, either by making fewer trips or substituting their own vehicle for public transport," the document concludes.

The collection for the hydrocarbon tax is marking its highest level in 2022, although slightly above 2019, which to date was the highest bar. Consumption in liters, however, has not yet fully recovered. In other words, as it is a tax that does not depend on the price but on the level of fuel sales, it is not generating exceptional income for the State and the communities for tax collection. It is unknown, because the Tax Agency does not disaggregate collection data up to that level, how much collection has increased by VAT that is charged each time you refuel. In any case, Spain is one of the European countries with the lowest tax burden on fuels.

Despite the fact that the special tax on hydrocarbons does not depend on prices, the Popular Party included this tax among its objectives to reduce taxes last spring. During an intense campaign to reduce fuel taxation, before the refueling bonus was finally approved, the PP made different mistakes by not explaining how it really works this tribute. The current president of the party, Alberto Núñez Feijóo, came to accuse the Government of being "lining up" with the rise in prices, despite the fact that this tax is 58% ceded to the autonomous communities.

This week, the PP has once again requested a reduction in this tax, despite the fact that its collection is not affected by the rise in gasoline prices. This is a proposal that is included in the document that has been sent to the Government to negotiate measures to alleviate the crisis due to energy prices. "The temporary reduction of the tax rates of the special tax on Hydrocarbons must be undertaken to the minimum contemplated in the European directive," reads the document published this Monday by the PP.

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