Fuel tax hikes being contemplated despite hefty existing rates

Despite the already burdensome tax imposed on auto fuel, representing about 70 percent of prices at the pump, the finance ministry is considering a further increase.

At present, 93 cents of the 1.329 euros – the national average – required to purchase a liter of unleaded fuel constitute fuel tax, one of the highest tax rates in the EU.

Greece already ranks among the EU’s top eight member states in terms of special consumption tax (EFK) imposed on unleaded fuel, which amounts to 67.8 percent. Greece also imposes the EU’s third highest VAT rate on unleaded fuel, this being 23 percent.

Although the pre-tax price of unleaded fuel in Greece ranks fifteenth in the EU-28, it ends up being the eighth most expensive once taxes have been added. Unleaded fuel is more expensive in Greece than it is in countries with far more robust economies, such as Germany, France, Austria, and Luxembourg.

A fuel consumption reduction and increase in illicit fuel trade will inevitably result if the finance ministry goes ahead with its plan to increase fuel taxes, sector pundits have warned. Also, the Greek state will ultimately suffer a decline in tax revenues if VAT and EFK tax rates are hiked, as was also the case between 2010 and 2015, they added.

Drivers will start looking for lower-cost fuel stations and fuel smugglers will be given incentive to heighten their illicit activities, sector pundits are anticipating.

To date, no effective measures have been implemented to combat fuel smuggling in Greece. A clear and determined government policy is lacking.

An “inflow-outflow” data system legislated by a preceding administration back in 2012 with the objective of tracking petrol station fuel purchases and sales is not yet fully operational. Also, a plan to fit GPS systems onto fuel trucks as a means of monitoring their moves has not been made.

Meanwhile, fuel consumption in January was down compared to figures posted a year earlier. Auto fuel consumption fell by 9.7 percent, while heating fuel consumption dropped by 7.7 percent.