Economy and Social Matters

Higher taxes on vehicles and fuels have meant that the costs of owning and using a car have gone up faster than the general cost of living in the last ten years.

In 2002, the average consumer spent about 13 % of his disposable monthly income on his car. The largest items were the initial purchase, fuel and repairs. The car is thus the second-largest item in the consumer's budget behind spending on accommodation, which accounts for about 40 % of the average budget.
If one analyses all of the individual aspects of car driving in an index, it can be seen that prices rose by over a third between 1991 and 2001. That is far more than the overall cost-of-living, which went up by 25 %. The car driver spontaneously tends to blame the oil firms who allegedly rip off the consumer at the petrol pump for making his driving pleasure so expensive. However, a glance at the statistics shows that the taxman is mainly responsible for the rising prices – and has ensured that fuels are a reliable source of revenue: in 2001, oil tax and value-added tax accounted for almost three-quarters of the petrol price – back in 1991, the proportion per litre was just over two-thirds.

The state does not tax diesel fuel quite so heavily – though the proportion of taxes is still higher than 60 %. The level of state intervention particularly increased in the early 1990s, when oil tax was increased by 20 cents in several stages, and again since 1999 with the introduction and gradual increase in the eco-tax.
Depending on the situation on the Rotterdam spot market – which reflects the current supply and demand situation – around 20 % of the price of petrol is accounted for by the basic product, crude oil. The oil company is left with 6 % from which to finance the costs of refineries, investment, transport, advertising and the commission earned by the filling station franchisee. And there should also be something left over for the shareholders.
Recently, the taxman has also started drawing generously on an additional revenue source: vehicle tax. Its rates climbed sharply at the end of the 1990s by more than 30 percentage points. A simple calculation shows how heavily the car drivers are hit by the state's price hikes. If one excludes what car owners have had to pay in taxes either at the petrol pump or by bank transfer, the prices for car driving would have remained stable: without the tax-induced rise in costs, spending on cars would have risen by a quarter since 1991 – in line with general cost of living.

In other words, without the intervention of the state, car driving would not have become much more expensive, but would have remained in line with the moderate price increases of the other goods and services. Since the early 1990s, normal unleaded petrol has only increased by 2.4 % a year before taxes. The untaxed petrol price only rose faster than the state-imposed cost components in 1993, 1995 and 1996.
The state participates in every cost-related price rise relating to the car in any case – and sticks another 16 % value-added tax on top.
The fact that the taxman imposes a much greater burden on car drivers here than elsewhere was recently shown by an EU directive on the minimum taxation of energy. For countries like Italy, it implies a medium-term rise in taxes. But the Commission's provisions would make no difference to Germany. This permits only one conclusion: Germany's car drivers are already suffering enough in comparison with their European neighbours.

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