Analysis
23 Mar 22

Fleets benefit from controversial fuel duty cuts across Europe

Governments across Europe are taking steps to protect businesses and private motorists from sky rocketing petrol and diesel prices, offering some relief to fleet budgets.

The war in Ukraine has pushed the price of oil to more than $100 per barrel, with a knock-on impact on pump prices.

Belgium, Croatia, Cyprus, France, Greece, Hungary, Ireland, Italy, Malta, Netherlands, Portugal, Slovenia, Sweden and the UK have all reduced fuel duty in a bid to cut pump prices.

Across Europe, fuel duty is a huge source of revenue for governments, raising more than €800 per 1,000 litres of unleaded petrol sold in the Netherlands, and more than €700 per 1,000 litres in Italy, Finland and Greece.

Following the recent spike in fuel prices, Italy has made the biggest cut to fuel duties, reducing duty on petrol and diesel by 25 cents per litre. As an aexample, for a Volkswagen Golf GTD company car covering 30,000km, with a WLTP fuel economy of 4.4l/100km, the fuel duty cut is worth €330 per year; while for a Mercedes-Benz Sprinter van (WLTP 6.8l/100km) covering 40,000km per year, the savings are even more substantial at €680 per year.

Elsewhere in Europe the reductions in fuel duty are more modest, but will still deliver useful savings to fleet budgets. Belgium has axed 17.5c/litre from both petrol and diesel, France has lowered duty by 15c/litre on both fuels, and the Netherlands has cut 17.3c/litre off petrol and 11.1c/litre off diesel.

Across the EU27, the reductions in duty are worth about €8.6 billion this year, according to green transport group Transport & Environment (T&E).

Controversial cuts

The cuts are controversial, given that the biggest winners are drivers of vehicles with the worst fuel economy, and high mileage drivers, at a time when governments are trying to reduce greenhouse gas emissions.

Griffin Carpenter, cars analyst at T&E, said: “The easiest way to avoid high oil prices is to make it possible for people to drive less. Governments should make homeworking a right and temporarily slash public transport fares. If governments want to help low-income households dependent on cars, they should lower income taxes, increase mobility allowances or simply issue cash cheques to those who need it.”

According to T&E, the richest 10% of drivers will receive eight times more in fuel tax cuts than the poorest, because they consume far more fuel.

However, inflation in energy costs have created a cost of living crisis, and forced politicians to act.

ICE vs EV TCO

Cheaper pump prices for petrol and diesel will delay the point when electric vehicles have a cheaper total cost of ownership than equivalent internal combustion engines, although the dramatic increase in fuel prices means this point has already been reached for some EVs.

Find out how to cut your fleet fuel bills in 10 easy steps

Images: Shutterstock, ACEA, T&E

 

 

 

 

 

Authored by: Jonathan Manning