Although ostensibly a revolt against high petrol prices, the current European tax revolt clearly has deeper roots. In fact, petrol prices in Europe are not significantly higher now than they were at the start of the year, according to the U.S. Department of Energy (see figure http://www.ncpa.org/pd/gif/pd091800a.gif ). In France, for example, petrol prices are only 15 cents per litre higher.
And in England, prices have risen just 23 cents.
By contrast, petrol has risen 53 RSA cents per litre in the U.S. without causing much of a furore.
Petrol prices have been high in Europe for ages without causing protests like those that we have recently witnessed. Nor have petrol taxes been rising lately. The price rise is mainly due to restrictions on oil output by the Organisation of Petroleum Exporting Countries. And for Europeans, another culprit is the sinking euro, the new European currency, which has fallen to about 86 cents per dollar versus $1.17 when first introduced last year, making oil more expensive for Europeans.
The focus of protests on petrol taxes, therefore, suggests it is the tax they are in fact concerned about, not just the rising price of petrol.
While Europeans have long suffered under higher tax burdens than Americans', there have been many, many tax revolts throughout European history. It is the postwar era in which Europeans have seemingly accepted exceptionally heavy tax burdens that is atypical.
What might account for tax militancy surfacing now? It could simply be that taxes have reached a breaking point, and taxpayers are just seizing upon the most visible tax target. An important factor has been the single currency in Europe and the breakdown of trade barriers. Differences in taxes among European nations have become more transparent, and the breakdown of trade and travel barriers has allowed consumers to shop across national borders to take advantage of tax differences.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, September 14, 2000.
For text http://www.ncpa.org/oped/bartlett.html
For more on Behavioural Effects of Taxes http://www.ncpa.org/pi/taxes/tax22.html#1
Publish date: 11 October 2000
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