Fuel prices to be pushed up by crude oil, imminent tax hike

The arrival of higher fuel taxes in Greece, decided on earlier this year and set to take effect as of January 1, coupled with elevated international crude oil prices, which appear to have stabilized at the loftier levels recorded over the past few months, promise steeper fuel prices for all consumer categories.

The higher crude oil prices have already influenced fuel prices, up by about three to four cents over the past ten days or so, elevating gasoline prices to around 1.49-1.50 euros per liter, diesel to 1.18-1.19 euros per liter and heating fuel to 96-98 cents per liter.

The higher special consumption tax, which was imposed on heating fuel on October 15 and will now also be applied to all auto fuels as of January 1, will bring about further price increases.

An extra 3 cents per liter of special consumption tax will be imposed on unleaded fuel, which, along with the VAT surcharge, will increase the tax to 3.7 cents and elevate the fuel’s average retail price to 1.53-1.54 cents per liter.

An additional 8 cents per liter of special consumption tax will be imposed on diesel, which, with the VAT surcharge, will reach 9 cents, taking this fuel’s average retail price to 1.27-1.28 euros per liter.

As for LNG, an extra 10 cents per liter of special consumption tax, to reach 12 cents with the VAT surcharge, will increase the fuel to 84 cents per liter from the current level of 72 cents per liter.

The government anticipates it will collect 492 million euros from these new taxes in 2017.

However, the findings of an IOBE (Foundation for Economic and Industrial Research) study conducted in October support that the fuel tax hike will reduce fuel consumption and, by extension, tax revenues, while increasing business costs.

The tax hike will subdue expected GDP growth by 0.3 percent – 530 million euros per year – in 2017, 2018 and 2019, according to the IOBE study. The subdued GDP growth translates into 10,700 job losses per year and an annual 178 million-euro reduction in other tax revenues and social security fund contributions, the IOBE study determined.