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The first link goes to a paywall for me. Is the fuel subsidized, or just taxed less? The tax on gasoline in Germany is roughly 100% at current prices.

by Zak 9y ago

zAy0LfpBZLC8mAC 9y ago
> Is the fuel subsidized, or just taxed less? What's the difference?
- Zak 9y ago
  In a big picture sense, they're the same. I think it says something different about intent though. A subsidy says something is essential or desirable. A relatively lower, but still very high excise tax says one thing is disliked less than the other.
  - zAy0LfpBZLC8mAC 9y ago
    But ... a tax break is a subsidy! And really, there usually is little significance to how the subsidy is paid, it's usually just an artefact of how it developed historically and how things were easiest to implement, potentially depending on psychological factors. I mean, what would the alternative look like? You have to pay the same tax for both, but then can claim back a fixed percentage of the taxes on diesel? On the same form? Or should they have created a separate agency that processes the refunds? There simply is no other sensible way to implement this subsidy, and that's why it is the way it is.
    - Zak 9y ago
      I think jacquesm adequately explained one of the major distinctions: a high tax that's slightly lower than the tax on a competing good does not result in a below-market price. While many of the effects are similar, it is not the same.
      - zAy0LfpBZLC8mAC 9y ago
        > a high tax that's slightly lower than the tax on a competing good does not result in a below-market price. Erm ... what do you consider "the market price"? I suppose it's not the price that people actually pay for something in the market, as then even the state paying for all your diesel needs would still not qualify as a subsidy (if the state pays for it, you don't pay anything, that would make the market price zero under that definition, so the free diesel would not be under market price, therefore not a subsidy, right?)? But what is the market price, if it's not what people pay? > While many of the effects are similar, it is not the same. So ... what is the difference then?
        Zak 9y ago
        In economics, oversimplifying slightly, the market price is the equilibrium price. That is, where the demand curve and supply curve cross. This is the price the market will settle on without outside forces acting on it. A subsidy results in a sale price below the equilibrium price while sellers receive payments above the equilibrium price. An excise tax has the opposite effect. Different excise taxes on competing products may lead consumers to prefer one over the other, but still results in less consumption of both products than the market would without intervention.
        zAy0LfpBZLC8mAC 9y ago
        OK, so let's check whether that holds up: Suppose petrol was taxed at 1000 EUR/l and diesel was taxed at 0.01 EUR/l. Do you think that that would lead to less consumption of diesel than in the no-intervention equilibrium with the seller receiving payments below the no-intervention equilibrium price?
yostrovs 9y ago
Diesel is subsidized, as it is in other parts of Europe.
- jacquesm 9y ago
  It is not, and is not in other parts of Europe. The only fuel in Europe that you could class as 'subsidized' is so called 'red' diesel that is used in agriculture. You could run that in your regular diesel engine and it will work just fine but the coloring will stain the fuel delivery system and the tank in such a way that even many runs of regular fuel later it is detectable and this will get you a very heavy fine.
  - Xylakant 9y ago
    Diesel is taxed significantly lower than petrol in germany which accounts for most of the substantial price difference. One could argue that this is a form ob subsidy.
    - jacquesm 9y ago
      Absence of tax is not a subsidy. A subsidy is when something is cheaper than it should be because the government picks up some of the costs.
      - Xylakant 9y ago
        They are both taxed, but at a different rate. The government picks up the cost in terms of lost income. Yes, it's a subsidy (a deliberate tax break). The historic reason is that diesel was used for trucks. Later, diesel cars were considered to be environmentally better since they produce less CO2 per kilometer. They're just worse in other regards.
        jacquesm 9y ago
        I'm sorry, but I just can't agree with you. If we start to take words and stretch their meaning beyond the agreed upon definition then any argument becomes meaningless. 'subsidy' is a very clearly defined term. "a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low." If the state is issuing a tax on something it is by definition not subsidized.
morsch 9y ago
It's taxed less. The tax on gasoline is about 0.78 EUR, the tax on diesel is 0.56 EUR (per liter). Source: http://www.zeit.de/2017/29/kraftstoffe-diesel-subvention-stimmts http://www.zeit.de/2017/29/kraftstoffe-diesel-subvention-sti...

The first link goes to a paywall for me. Is the fuel subsidized, or just taxed less? The tax on gasoline in Germany is roughly 100% at current prices.

by Zak 9y ago

The first link goes to a paywall for me. Is the fuel subsidized, or just taxed less? The tax on gasoline in Germany is roughly 100% at current prices.

zAy0LfpBZLC8mAC 9y ago

> Is the fuel subsidized, or just taxed less? What's the difference?

Zak 9y ago
In a big picture sense, they're the same. I think it says something different about intent though. A subsidy says something is essential or desirable. A relatively lower, but still very high excise tax says one thing is disliked less than the other.
- zAy0LfpBZLC8mAC 9y ago
  But ... a tax break is a subsidy! And really, there usually is little significance to how the subsidy is paid, it's usually just an artefact of how it developed historically and how things were easiest to implement, potentially depending on psychological factors. I mean, what would the alternative look like? You have to pay the same tax for both, but then can claim back a fixed percentage of the taxes on diesel? On the same form? Or should they have created a separate agency that processes the refunds? There simply is no other sensible way to implement this subsidy, and that's why it is the way it is.
  - Zak 9y ago
    I think jacquesm adequately explained one of the major distinctions: a high tax that's slightly lower than the tax on a competing good does not result in a below-market price. While many of the effects are similar, it is not the same.
    - zAy0LfpBZLC8mAC 9y ago
      > a high tax that's slightly lower than the tax on a competing good does not result in a below-market price. Erm ... what do you consider "the market price"? I suppose it's not the price that people actually pay for something in the market, as then even the state paying for all your diesel needs would still not qualify as a subsidy (if the state pays for it, you don't pay anything, that would make the market price zero under that definition, so the free diesel would not be under market price, therefore not a subsidy, right?)? But what is the market price, if it's not what people pay? > While many of the effects are similar, it is not the same. So ... what is the difference then?
      - Zak 9y ago
        In economics, oversimplifying slightly, the market price is the equilibrium price. That is, where the demand curve and supply curve cross. This is the price the market will settle on without outside forces acting on it. A subsidy results in a sale price below the equilibrium price while sellers receive payments above the equilibrium price. An excise tax has the opposite effect. Different excise taxes on competing products may lead consumers to prefer one over the other, but still results in less consumption of both products than the market would without intervention.
        zAy0LfpBZLC8mAC 9y ago
        OK, so let's check whether that holds up: Suppose petrol was taxed at 1000 EUR/l and diesel was taxed at 0.01 EUR/l. Do you think that that would lead to less consumption of diesel than in the no-intervention equilibrium with the seller receiving payments below the no-intervention equilibrium price?

yostrovs 9y ago

Diesel is subsidized, as it is in other parts of Europe.

jacquesm 9y ago
It is not, and is not in other parts of Europe. The only fuel in Europe that you could class as 'subsidized' is so called 'red' diesel that is used in agriculture. You could run that in your regular diesel engine and it will work just fine but the coloring will stain the fuel delivery system and the tank in such a way that even many runs of regular fuel later it is detectable and this will get you a very heavy fine.
- Xylakant 9y ago
  Diesel is taxed significantly lower than petrol in germany which accounts for most of the substantial price difference. One could argue that this is a form ob subsidy.
  - jacquesm 9y ago
    Absence of tax is not a subsidy. A subsidy is when something is cheaper than it should be because the government picks up some of the costs.
    - Xylakant 9y ago
      They are both taxed, but at a different rate. The government picks up the cost in terms of lost income. Yes, it's a subsidy (a deliberate tax break). The historic reason is that diesel was used for trucks. Later, diesel cars were considered to be environmentally better since they produce less CO2 per kilometer. They're just worse in other regards.
      - jacquesm 9y ago
        I'm sorry, but I just can't agree with you. If we start to take words and stretch their meaning beyond the agreed upon definition then any argument becomes meaningless. 'subsidy' is a very clearly defined term. "a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low." If the state is issuing a tax on something it is by definition not subsidized.

morsch 9y ago

It's taxed less. The tax on gasoline is about 0.78 EUR, the tax on diesel is 0.56 EUR (per liter). Source: http://www.zeit.de/2017/29/kraftstoffe-diesel-subvention-stimmts http://www.zeit.de/2017/29/kraftstoffe-diesel-subvention-sti...