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back to article Fuel taxes don't hurt the world's poor - they don't have cars

People with lots of cash in their pockets are much harder hit by a hike in petrol taxes then those living in poorer countries, a professor of environmental economics and his team of international researchers have argued. Prof Thomas Sterner at the University of Gothenburg said the reason for his claim is simple: people living in …

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Anonymous Coward

shurely

these taxes are then regressive if the proceeds are not spent on public transport to mitigate the effects on poor people in developed countries?

where's Tim Worstall when you need him?

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Bronze badge

umm

I think the professor wqould agree that fuel taxes are regressive in rich countries. AS spending upon fuel is a higher proportion of poor incomes than of rich incomes in rich countries.

What the report really means is that as, in poor countries, fuel taxes are progressive (ie, only the rich have cars so only the rich pay them) then we should be arguing for lots of fuel taxes in poor countries.

Just fine by me.

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Facepalm

Any time I hear scientists say 'economic justice'

I think that they've ventured out of science and into 'social engineering'.

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A team of International Experts

It must have been a mighty high-powered team to come up with this. Would they like to test the hypothesis that bears shit in ......?

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Flame

Don't forget the conference in Dubai!

Because the tax on jet fuel used wont impact the poor, or the conference guests for that matter, since they wont be paying their own fares anyway.

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tax on jet fuel ?

As far as I and Wikipedia know, jet fuel is not taxed, not even VAT in the UK. This helps to reduce the airline bancrupcies. This is also handy for people with their own jets, but that probably wasn't considered in the good boffin's rich vs poor calculations.

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Correct, aviation fuel is not taxed

>> As far as I and Wikipedia know, jet fuel is not taxed, not even VAT in the UK. This helps to reduce the airline bancrupcies. This is also handy for people with their own jets ...

The reason aviation fuel isn't taxed is because of international treaties - it's nothing to do qith reducing airline failures which has never been a consideration for the tax man. If (say) the UK imposed heavy tax on aviation fuel, there would be a big economic incentive for aircraft to arrive in the UK and only take on enough fuel to reach their next stop outside the UK - in principal they'd like to have just enough to land and taxi to the stand but no-one would push it *that* far*. They'd then fuel up outside the UK, cramming as much in as possible and minimise the amount they need to buy on the next stop in the UK.

* There are in fact rules on minimum reserves to be carries, but even with these, there have been incidents where aircraft have run out of fuel. Some of these have been due to errors (lookup Gimli glider), some just down to using more fuel than they expected. Running out of fuel during a flight is not generally considered a good thing !

Such is the cost of fuel to feed a large aircraft, if there is enough differential, airlines will re-route and/or add addition stops if that will reduce their costs.

Clearly there are significant safety issues if airlines are pushing things to the limits, and so there are international treaties that aviation fuel isn't taxed by any country so as to minimise such incentives.

Not only is this a source of envy to non-flyers, it's also a source of envy for those flying at the lower end of the scale where fuels (AvTur (for turbines) for non-commercial use, and AvGas (petrol) for all uses including commercial) is heavily taxed with fuel tax and VAT on top of that.

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Pint

Reminds me of diesel taxes

One US state that shall remain nameless thought that they would raise the taxes on diesel for railroads, make a lot of money from a captive market. A Class 1 freight railroad that also is nameless just hooked up a couple 90,000 gallon tank cars full of diesel behind each engine before they entered the state, and completely stopped buying diesel there.

The tax only lasted a few months.

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Anonymous Coward

Go figure! Doesn't take a professor to work this out!

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Amazing

This man is a Professor and thinks cars are the only things that use petrol.

Of course goods magically fly onto shelves.

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Absolutly

How this hack has received any attention is beyond me, Fuel price effects everyone and everything.

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Facepalm

magically flying goods

if you take the $0.007 (or whatever) of fuel used to get my can of peas onto the store shelf, and increase that to $0.0071 (or whatever) with harsh regressive carbon taxes, I'm not going to starve. But thanks for thinking about me.

Then let's go to darkest Africa and you show me the store with the shelves with the truck pulling up to the back to unload. I assume you picture the rest of the planet to be like your neighbourhood, but so much poorer. For the average earthling (<$2/day), the lucky ones (ie not among the tens of thousands who starved to death today) get their groceries by walking down to the village market to see what the local beasts of burden have dragged in from the fields today. Put a 10,000% carbon tax on and the millenia will continue to pass by as normal.

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Theres a whole world of different scenarios between people living in mud huts farming the immediate area and huge western cities importing goods from the other side of the planet.

Fuel taxes will keep more people in the former category than moving them to the latter.

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Anonymous Coward

Also...

Fuel taxes don't hit people living on benefits: they don't have to drive to work.

And I suppose his theory also implies that petrol consumption is proportional to wages, hence making fuel tax hikes fair?

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But they have to drive to sign on and dole offices are seldom located in convenient places.

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Happy

away around that

That problem can be addressed. Just make the signup online and then neither the claimant nor the bureaucratic would have to drive.

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Anonymous Coward

I guess you've never been in a dole office then?

Hint: There aren't queues of cars pulling up outside dropping people off and picking them up. In practice, almost everyone arrives on foot.

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Anonymous Coward

not anymore

offices are located based on census geolocation data so the offices are convenient. And we've already started the ability to apply via the Internet two years ago.

We're setting up the ability to take all documents via email and fax and automatically set them to caseworkers properly classified.

Which means no ever going to the office. No ever having to make a physical presence as proof to who you are. Nor does the system care about (and is not allowed by policy to care about) where in the world applications are sent from.

So like spam, send out a few thousand applications cheap-if one sticks, you've profitted.

Meanwhile I have to go to work to implement this system and get pay cuts whilst benefits folks always see maximum cost of living/rent increase/food subsidy increases every single year.

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1) It is true that petrol taxes don't directly hit much a person who doesn't own a car, which includes most people in developing countries. However, if you only look at people who do own a car, which means most people in developed countries, petrol taxes do indeed hit the relatively poor disproportionately in that they consume a far larger percentage of their income compared to the rich. Yeah, the rich probably tend to have bigger cars that use more gas, but this isn't sufficient to make the tax fair. It's an essentially regressive taxation on everyone who owns a car. The fact that it doesn't apply to people who don't own a car doesn't change that.

2) The cost of fuel isn't only paid by those who drive. Higher fuel costs mean higher transportation costs, and higher transportation costs are reflected on pretty much everything. Granted, this hidden cost is probably smaller than directly paying petrol taxes, but still, it isn't true that if you don't own a car, then petrol taxes don't impact you.

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IT Angle

Classic propagandist fallacy

Yours is the classic antisocialiast[*] argument.

1. What hurts the relatively poor (among others) is living in a society that expects you to have a car and marginalises/socially excludes you if you don't. Fix that and we're all better off. The best thing for poorer folks in rich countries is to align their interests with richer folks, which happens in spades if the latter move away from car-dependence.

2. Yes, some things would cost more (but set against that the tens of billions per year the freight transport folks tell us is lost to congestion). But I'd rather pay more tax on destructive activity instead of having to pay quite so much of my hard-earned for the privilege of working.

[*] If socialism is things done to improve the lot of the poor, then what should we call things done for the rich but in the name of the poor? I say antisocialism.

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Big Brother

The best thing for the poor

Is to make sure they can afford to buy and run cars if they want to. That's not a policy "for the rich".

Secondly, socialism isn't "doing things to improve the lot of the poor". Socialism is doing things "as a society", i.e. collectively, as opposed to allowing us all to get on with doing our own things.

It's great if you can get yourself appointed to be the person controlling what is done - you can live like a monarch, get everything you want and as much shagging impoverished factory workers as you can fit into your busy schedule of ordering people around.

But as for "doing things to improve the lot of the poor"....... well, socialism doesn't achieve that, does it?

If you are only going to learn only one thing from the history of the 20th century, that should be it. If you have time to learn two, it should be that adding nationalism into the mix, to make fascism/national socialism doesn't help.

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Poor people to align their interests with rich people?

You've never had to deal with rich people, have you? Their interest tends to be themselves - that's why they're rich. For poor people to align their interests with the rich people means serfdom. Or Cristal and foie gras.

Not really the champion of the working man there...

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Anonymous Coward

Political bullshit alert.

>Socialism is doing things "as a society"

> It's great if you can get yourself appointed to be the person controlling what is done

I see what you did there. You pretended you were going to describe socialism, but did a bait-and-switch and started describing tyranny instead. The jarring non-sequitur gives you away, of course; there's nothing about "doing things collectively" that necessarily implies it has to all be controlled by a single dictator, in fact "doing things collectively" implies not having a privileged elite, because that's not what "collectively" means. The intellectual dishonesty of your rhetorical trick implies that you don't actually have any strong arguments against socialism itself.

>"But as for "doing things to improve the lot of the poor"....... well, socialism doesn't achieve that, does it?"

Well, yes it does actually; places like Cuba and various South American countries have all seen vast improvements in literacy and healthcare for the poor under socialist regimes. You can argue all you like about the relative pros and cons of the various trade-offs, but pretending that it does nothing at all for the poor is just blatantly false.

I'm going to treat the remaining part of your comment, the reductio ad hitler argument, with the contempt it deserves. The German fascist regime of the '30s-'40s was an absolute corporatist-statist dictatorship, using nationalism as a populist force to bind the population; calling itself "socialist" was just marketing. Just calling yourself "socialists" doesn't make you socialists - surprising that you should so trustingly accept the word of a bunch of psychopathic mass-murderers about their own self-description.

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Stop

Socialism

Clearly your concept of socialism does not recognize the inevitably privileged "more equal than others" apparatchik bureaucracy inherent in all socialist states, as in non-socialist models.

Speaking of intellectual dishonesty, dictatorship is not inherently monarchical in character, it can be, and frequently is, collegiate in structure.

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Coffee/keyboard

Up the socialists!

"places like Cuba and various South American countries have all seen vast improvements in literacy and healthcare for the poor under socialist regimes... pretending that it does nothing at all for the poor is just blatantly false."

So now that literacy and healthcare are vastly improved, the poor can be poor for longer, and be able to write about being poor.

Woo.

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Anonymous Coward

self interest

poor people are just like rich people. Especially when it comes to voting for more benefits for themselves, not caring what it does to the system or who pays for it.

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mostly true on point 1

At least in Canada the rich are more likely to be driving a new car while the poorer you are the older your car will be. Older cars will have less efficient engines to begin with along with the normal losses of efficiency from a worn engine.

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Pint

Socialism

How refreshing to see clarity of thought expressed in a sea of ignorance and gross political misrepresentation.

Socialism = the ants' nest or the bee hive. If you are obliged to live with socialism the obvious survival mechanism is, as you observe, to try to be one of the more equal animals.

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Food prices?

Food price hikes have recently been attributed in part to greater fuel costs, a fuel tax such as this will only be effective if there is alternative and reasonably priced mass transit infrastructure in place or if the duty is tiered so that fuel for domestic use is higher than fuel for commercial use (although that's political suicide).

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Bronze badge

Not to mention food production

An awful lot of the production cost of food takes the form of driving various sprayers, harvesters, ploughs etc back and forth over fields on a regular basis, clocking up a lot of mileage.

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Gold badge

Re: food production

I thought all that was done with pink diesel.

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No, it just tastes like it.

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Holmes

Not after it leaves the farm

For example, from farm to mill, from mill to bakery, from bakery to shop, is all fuel-duty paid.

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Headmaster

@ Ben Liddicott - "Not after it leaves the farm"

Not if it is sent by rail.

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Prof. Sterner: a new tax opportunity

I assume that rural Sweden (Denmark) has a highly developed, regular, frequent, reliable, reasonably priced public transport system, running 24/7/365 for use by the rural poor?

This story suggests a new tax opportunity: we could designate our (unusually high) share of unemployable FuckWits in this country as Professors and tax them accordingly.

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Joke

Too late, they have already been designated as "Politicians".

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ql
Unhappy

May be true for first world city dwellers

But for people who need transport away from well developed public transport it's a very penalising regime, and that's true for all parts of the world. Presumably the illustrious prof requires everyone to stream to the cities where managing people is so much easier.

What's more, the rich can afford alternatives such as electric cars, also only designed for city use. I suppose the prof's thinking is fine providing he stays behind his desk, but if he got out into the world a little he may change his mind.

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Indeed. I know some very low wage people stuck in circumstances where they are spending £50 on petrol per week just to go to work. If you're in a city it's fine, there are other options. But many work places are simply not near public transport.

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Anonymous Coward

Take a hike, ride a bike

Your logic could stand a bit improvement. In *cough* certain places lots of infrastructure is built on the premise that "everyone has a car", thus shifting overall costs around a bit (cheaper out-of-the-city locations vs. having your customers pay for the difference in increased gas costs and oh the cost of owning a car) and causing a lock-in that really isn't strictly necessary.

Besides, if fuel taxes rise, there will be demand and thus pressure to provide more and better public transport, and/or other alternatives. It's not static; things change. New market opportunities galore. On top of that, much of that "need" isn't, but is frivolous and could be done a different way to boot. In fact, maybe we'll see a rise of car rentals or car sharing schemes, or more light motorcycles, who knows? In, say, Germany it's already quite common to announce you're making a long trip and invite people to ride with you for a bit of fuel money, something only made easier by things like "the internet".

Cars win because they're comparatively cheap and easy, perhaps too much so in certain places. Fuel prices increases, so cars are no longer that cheap. Well, that just changes the equation. People'll find a way.

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IT Angle

Why not talk about what you know?

Speaking from the wilds of west Devon, I cross a stretch of Dartmoor just to get to the local supermarket. Cars are a major blight here too.

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Anonymous Coward

Oh

You've got no business living in the country unless you are rich or the gardener or cleaner for someone who is rich. Get back into the urban tower blocks where you belong.

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Silver badge

But Nick, that's your choice isn't it? You could quite easily live elsewhere in Devon, and live within walking distance of amenities. For you, the negatives of living in an isolated area are outweighed by the positives.

I also smirked at some comments about people moaning about paying £100/month in fuel to get to work. I pay £128/month to get jammed into a sweaty metal box with a hundred other people in order to get to work, you lucky bastards :)

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circular argument...

you could work somewhere where you didnt need a train to get to work. or you could buy a car?

i was talking about the gov taxing me £100+ to get to work. i spend more than you do getting to work and i probably live nearer. where i live, due to all our tax going south, we are stuck with single carriage ringroads averaging 20mph.

i dont get paid london wages. you know, there is part of england above watford. in fact the majority of the country lives above it, we pay tax too and rarely see any of it spent locally.

we pay plenty of tax to see it all spent 'darn sarf'. we have shitty public transport here. at least you get subsidised travel (presumably train) where as the gov actively increase my travel expenses exponentially.

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Anonymous Coward

yeah, choose to live closer to work

where rents and property prices are 10x-50x higher than the less desireable parts of town that are farther away.

Fail.

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Anonymous Coward

a question

do manufacturers who make things with oil/petrol other than vehicle fuel pay duty on the raw material? If they do then these taxes are even more unfair on the poor in developed countries.

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Paris Hilton

No they don't

Fuel duty is paid only on transport fuel.

There are other taxes which are paid on feedstocks though.

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Wedded to the car.

In reality, you actually don't want the poor driving cars, anywhere, and you don't want the rich using them much either. The problem is, that in the west a car is a status symbol, and also a symbol of personal freedom. Take away a car, and you take away freedom.

For employers, employee car ownership gives them a much larger pool of potential employees who can come to them, at their cost. Diminish car ownership, and you become reliant on public transport corridors and the local area. A lot of public and private organisations have been able to reduce their costs by centralising on cheap locations, at the expence of employees.

Take cars away from the poor, and the cheap labour pool becomes smaller, and localised, and you have to diversify your locations, increasing your costs, so it's in the interests of the rich for the poor to have cars.

It's also true that public transport is, on marginal cost, more expensive for an individual than driving.

With government and industry trying to centralise in order that they have large low carbon footprint sites, shifts the transport footprint to the employee, and forces low paid employees to travel, by car, as there is very little, if in the way of public transport from their home.

So unless Industry and Goverment start seriously thinking about the green footprint of their employees, rich or poor we all need cars. I'd prefer it that none of us need cars, but sadly increasing fuel costs will be the only way we all come of our car dependency, and not in a planned way.

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Bronze badge

"For employers, employee car ownership gives them a much larger pool of potential employees"

Another way to look at it is that, thanks to roads and cars, people can look for a job beyond a 5 mile radius of where they live therefore being able to choose a better job instead of being slaved to the local ones or having to move every couple of years to the new company town.

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Stop

My car is not a status symbol

"The problem is, that in the west a car is a status symbol..."

For a small minority maybe, but for me, my car is merely a practical device - it's no more a status symbol than my washing machine. I have a washing machine because it's crap for all sorts of reasons to have to go to the laundry; I have a car so I can go shopping, visit friends/relatives, go to the football, go on holiday, go to the tip, go to obscure places, take my family to the beach, get to work, etc., etc., etc.

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A car is more than a symbol

"The problem is that in the west a car is... a symbol of personal freedom"

It's more than a symbol. It is an expression and a genuine expansion of your fundamental freedom to move - think more "personalised motorised transportation" rather than "car". We're wedded to the car here in the West because they are bloody amazing; they enable so much that we take for granted. I think too many people forget that when discussing "the car" and its negative impacts on society

Once you have a car, the only reason you'd give one up would be because the cost to your time (e.g. congestion in Central London) or the financial costs have become unsustainable. In everywhere other than central UK city locations not having a car puts you at a large disadvantage compared to others - you need motorised personal transportation for work, family life and holidays, and for the times when you don't actually *need* it, it makes life easier anyway. In other words, they are bloody amazing.

Arguments about the future of "the car" are way off in my opinion. No one is going to give up the concept of personal transportation, it is embedded in our culture now. It would be better to focus on decarbonising the transport grid (e.g. by changing the fuel) instead of forcing people out of cars and depending on public services.

Also, high running costs (e.g. high taxes) impact the poor by preventing them from owning and running their personal motorised transportation. You can't tell me that by pricing someone out of a car with too-high running costs they are therefore unaffected by the high running costs of a car. That just doesn't make sense to me

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