What is the point of increasing excise duties on electricity for charging, if the lower revenues on fuel are compensated by lower costs for importing oil? Lorenzo asks us this, having done the math on Italian macroeconomic data. Send questions and observations to [email protected].
My two accounts: excise taxes are useless
“VI have been following you since well before becoming an electric car owner and I thank you for the important voice you represent in this panorama, often full of biased and poorly argued news and opinions.
From the news coming from the press, one of the hottest topics is the possibility that the spread of electric cars leads to lower excise and VAT revenue due to the progressive reduction in the use of fossil materials such as oil.
If I remember correctly, some time ago a study was conducted on Italian energy and oil demand between 2019 and 2040. From that data it emerged that Italy currently imports 57 million tonnes of oil. Considering that on average the cost is around €533/TOE (based on an oil price of 80 dollars per barrel and a EUR/USD exchange rate of 1.1), this implies an annual expenditure of 30.381 billion euros for the import of oil.
Between fuel and electricity, income and expenditure balance out
To date, the revenue from the sale of fuel is 6 billion euros (4 billion from excise duties and 2 billion from VAT). In the 2019-2040 study it is predicted that by 2040 energy demand in Italy will decrease and oil imports will reduce by 25%. According to current prices (533 €/TOE), a 25% reduction in oil needs would result in savings for the state of 7.59 billion euros, a saving far greater than what is currently collected from excise duties and VAT on fuel fossils.
If the forecasts of a decline in oil demand, to which electric cars contribute largely, are correct, how can the proposed introduction of excise duties on electric car charging be justified? A decline in fuel requirements leads to lower import costs that Italy must bear. It therefore seems unjustified to transfer excise duties to electric car charging.
Furthermore, it should be considered that excise duties of €9.30 per MWh are already applied to electricity and that the provinces can independently decide on increases of up to €11.40 per MWh.
What do you think and, if so, where do you think my reasoning is wrong, from a macroeconomic point of view?” Lorenzo Vannucci
It is not possible to distinguish and count electricity for charging
Answer-We also think that the ventilated excise taxes on electricity for charging are one agitated bogeyman out of turn by the enemies of the electric car for discourage their purchase.
Unlike fuels, all traceable and all intended to power combustion engines, the electric current it goes online without it no default recipient. It powers millions of homes, hundreds of thousands of businesses, all the digital systems that are at the heart of our society.
Of the total electricity consumption, i battery-powered vehicleseven when they are ten or twenty times more numerous than today, they will have a fairly marginal weight and will represent between 10 and 15% of the total.
Increasing excise duties only on electricity consumed for transport is impossible (how do you distinguish and quantify it?) and it would never make up for it The missing income from those on fuels. And increasing them on the total electricity consumption would mean penalize 85-90% of economic activities to return the proceeds guaranteed today only by the transport sector.
Costs and benefits for public finances
However, Lorenzo, your reasoning is not entirely correct on a macroeconomic level. The costs incurred for the import of hydrocarbons are borne by the entire Italian system. It is wealth produced internally that goes abroad, to the large oil producers and exporters; but it does not represent an outflow in the State Budget. The collections of excise duties on fuel, vice versa, are a non-negligible part of the state’s revenue and help pay for services such as healthcare, schools and defence. I am therefore two voices that cannot be directly compensated for each other.
It’s true though the more wealth remains in Italy, the more the public budget will benefit by taxing it with general taxation. Not to mention that the public budget will have two benefits from less polluted air and the mitigation of the climate crisis: lower healthcare costs And lower outlays to pay for damages of catastrophic climate events.
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