NCPA - National Center for Policy Analysis

A European Tax Revolt

September 18, 2000

Although ostensibly a revolt against high gasoline prices, the current European tax revolt clearly has deeper roots. In fact, gasoline prices in Europe are not significantly higher now than they were at the start of the year, according to the Department of Energy.

  • In France, for example, gasoline prices are only 8 cents per gallon higher.
  • And in England, prices have risen just 12 cents.
  • By contrast, gasoline has risen 28 cents per gallon in the U.S. without causing much furor.

Gasoline prices have been high there for ages without engendering protests like this. Nor have gasoline taxes been rising lately. The price rise is mainly due to restrictions on oil output by the Organization 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 yea, making oil more expensive for Europeans.

The focus of protests on gasoline taxes, therefore, suggests it is the tax they are in fact concerned about, not just the rising price of gasoline.

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.


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