Sunday, April 19, 2009

Why Europeans Pay Higher Gasoline Taxes

There are fundamental differences between Europe and the US that make the European gasoline and diesel retail tax model unsuitable to the US.

First, there are major differences in population density. High European population density and the clumping of European populations makes public transportation a convenient alternative. US population density is much less than a third that of France, Germany, Italy and the UK. The less dense US population is also less clumped. Thus, public transportation is not an option for a large portion of the the US population.

Second, North America’s geography dictates far different commercial transportation patterns. The EU has seven times more coastline for its landmass than the US. European commercial seaports are in close proximity to consumer centers and less road trucking is required. In the U.S., two large coastlines require commercial oil powered trucking to haul goods inland.

Third, car ownership is spread more widely across the wealth spectrum in the US compared to Europe. Higher gasoline taxes would therefore impact a much larger portion of the US electorate versus Europe.

Given these fundamental differences, European governments have had an easier time implimenting high retail taxes on gasoline compared with US governments.

The US should look for solutions appropriate to US circumstances, rather than adopting ill-fitting models. The US could instead use a simple Vehicle Efficiency Market rather than a retail gasoline or diesel tax to increase efficiency.

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