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Fuel Tax

fuel tax (also known as a petrol tax, gasoline tax, gas tax or fuel duty) is a sales tax imposed on the sale of fuel.

A fuel tax (also known as a petrol tax, gasoline tax, gas tax or fuel duty) is a sales tax imposed on the sale of fuel. In the United States, the funds are often dedicated or hypothecated to transportation, or even roads, so that the fuel tax is considered by many a user fee. In other countries, the fuel tax is a source of general revenue.

In most countries the fuel tax is not imposed on fuel which is not intended for transportation: fuel used to power agricultural vehicles, and or home heating oil which is identical to diesel. This creates an economic incentive for illegal use of fuel.

Fuel Tax rates in US


The tax on fuel in Canada can vary greatly between provinces. On average, 40 to 50% of the total price of gas at the pump is tax. The federal government receives its share through the excise tax (10 ¢/L) and the Goods and Services Tax (7% of the whole price, taxes included - it is a tax on a tax). Most of the variation comes from the provincial tax. The lowest being the Yukon with 6.2 cents per litre and the highest being Newfoundland and Labrador with 16.5 cents per litre. In addition to this there is sometime provincial sales tax, such as in Quebec (a tax on a tax on a tax), and in larger urban centers there is a transit tax.

Taxes collected by the federal government (totaling $10,000,000,000 a year) do not get reserved for any specific program. However, provincial taxes usually go to fund road repair and construction.

United States of America

The first U.S. state tax on fuel was introduced in February 1919 in Oregon. It was a 1 cent per U.S. gallon (0.3¢/L) tax. In the following decade, all 48 U.S. states and the District of Columbia introduced a gasoline tax, and by 1939 an average tax of 3.8¢/gal (1¢/L) of fuel was levied by the individual states.

While state fuel taxes had been around for more than a decade, the first federal gasoline tax in the United States was created on June 6, 1932 with the enactment of the Revenue Act of 1932 with a tax of 1 cent/gal (0.3¢/L). The U.S. federal gasoline tax as of 2005 was 18.4¢/gal (4.86¢/L), and the gasoline taxes in the various states range from 10 cents to 33 cents, with an average about 22 cents per U.S. gallon (5.8¢/L). Unlike most goods in the U.S., the price displayed includes all taxes, rather than being calculated at the point of purchase.

All text of this article available under the terms of the GNU Free Documentation License (see Copyrights for details).

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