Americans Pay Hardly Any Gasoline Tax Compared to Everyone Else
Americans heard a lot about how much we pay in taxes during the campaign of 2016, and much of it wasn’t true. For example, any claim that U.S. taxpayers footed a higher tax bill than Europe was false. But that’s only scratching the surface. While Americans pay lower income tax than most countries, it isn’t close when it comes to gasoline.
International Energy Agency (IEA) figures from 2015 reveal U.S. drivers pay less than a third what residents of the United Kingdom, France, and Germany pay. In fact, even Canada — American’s oil-sands-dredging, pipeline-building neighbor to the north — pays double what folks south of its border do. Japan, the only Asian country represented on the graph, pays two-and-a-half times what we pay in gasoline taxes.
Of course, these numbers only represent the share of gasoline prices with respect to taxes, which was 19% in 2015. Last year, U.S. drivers paid over 30% less in gasoline tax than they did in 1990, when it was 27%. Canada’s 36% share (almost double) of tax in its gasoline prices was the only country to come close to the U.S. standard in the IEA data.
Of course, the U.S. had by far the lowest price of gasoline of any of the countries pictured. Compared to the European countries, the U.S. average below $2.50 was less than half, and dollars lower than Japan’s in 2015. That number, $2.50, should ring a bell for anyone who remembers the 2012 election.
On the campaign trail in 2012, GOP presidential hopeful Newt Gingrich laid down the gauntlet with his energy policy. “If you would like to have a national American energy policy, never again bow to a Saudi king and pay $2.50 a gallon, Newt Gingrich will be your candidate,” NBC News reported the candidate saying. “If you want $10 a gallon gasoline … Barack Obama should be your candidate.”
While the $10 gas never became a reality in America, $2.50 gas did. In fact, prices at the pump averaged less than $2.50 per gallon for all of 2015 and were been far below that mark in 2016. Auto industry analysts cite the low cost of oil and gas for the drop in hybrid car sales over the past few years, as well as the slow adoption rate for electric vehicles. Sport utility vehicles (SUVs) and trucks, on the other hand, are enjoying record market share in the U.S.
According to AutoWeek, Americans are on pace to buy over 10 million trucks and SUVs for the first time in history in 2016. For a segment where an economical vehicle gets over 25 MPG, you can see how cheap gas is influencing the consumer market. The idea of an SUV boom in Germany, where gas costs $6 per gallon, is slightly preposterous. Even in Japan ($4.50), consumers could not possibly take on the same percentage of gas guzzlers.
Meanwhile, air-quality concerns have re-emerged as the auto industry went on its record run. Business is so good for automakers, Ford CEO Mark Fields is vowing to fight the EPA’s current fuel economy mandate, arguing consumers don’t want economical vehicles. Not at $2 per gallon, they don’t. Had there been any rise in taxes on a gallon of gasoline during the historic drop in the oil market, the situation would be different. (Obama proposed one, in early 2016, to no avail.)
As it stands, Americans hardly pay any gasoline tax and startlingly low prices for gas overall. There are many factors at work here, but we know Newt Gingrich had nothing to do with any of it. President Obama turned out to be the man for $2 gas, and everyone — especially those in the auto industry — benefited.