How High are Other Nations’ Gas Taxes?

March 3, 2015

The U.S. federal government funds infrastructure projects through the highway trust fund. This trust fund receives revenue from mainly the excise tax on gasoline, and uses the revenue to pay for transportation projects through grants to state and local governments.

The taxes and spending associated with the highway trust fund are based on the benefit principle of taxation, which states that what one pays to the government should be connected to the benefits one receives.

Currently, the federal government levies a $0.184 per gallon tax on gasoline. In addition, state and local governments levy an average gas tax per gallon of about $0.35. This is an average combined rate of about $0.53 a gallon.

The U.S. combined gas tax rate is actually a lot lower than rates in other industrialized countries. According to data from the OECD, the average gas tax rate among the 34 advanced economies is $2.62 per gallon. In fact, the U.S.’s gas tax is the second lowest (Mexico is the only country without a gas tax) and has a rate less than half of that of the next highest country, Canada, which has a rate of $1.25 per gallon.

On top of excise taxes, all OECD countries levy their value added tax (VAT) on gasoline consumption. In the United States, only a few states (Hawaii, Illinois, Indiana, and Michigan) levy an additional sales tax on gasoline purchases. This means that the difference between taxes paid on gasoline in the United States and other OECD countries is even larger than the data on just excise taxes implies.

Without data on what the gas tax revenue is used for across the OECD, it’s hard to make a direct comparison between the U.S. and other countries. For instance, Turkey, which has the highest gasoline excise tax in the OECD ($4.32 a gallon), may only use a small fraction of the revenue for roads. The rest may be used for other government spending. If this is the case, their gas tax doesn't conform to the benefit principle as strictly as it does in the United States. In other words, their gas tax is high not because they spend more on roads, but because they chose to tax gas more.

OECD Gas Excise Tax Rates (Per Gallon), 2013

Country

Tax Per Gallon

Australia

$1.40

Austria

$2.46

Belgium

$3.10

Canada

$1.25

Chile

$1.93

Czech Republic

$2.50

Denmark

$2.95

Estonia

$2.12

Finland

$3.26

France

$3.07

Germany

$3.29

Greece

$3.37

Hungary

$2.08

Iceland

$1.97

Ireland

$2.95

Israel

$4.20

Italy

$3.67

Japan

$2.16

Korea

$2.69

Luxembourg

$2.31

Mexico

$0.00

Netherlands

$3.79

New Zealand

$2.01

Norway

$3.67

Poland

$2.01

Portugal

$2.95

Slovakia

$2.57

Slovenia

$2.76

Spain

$2.35

Sweden

$3.10

Switzerland

$2.99

Turkey

$4.32

United Kingdom

$3.44

United States

$0.53

Average OECD

$2.62


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