Government Bill on Fuel Tax Increase – Not Only Rural Setback

In Sweden today, the transport sector accounts for a third of both the total energy use and emissions of greenhouse gases. Fossil fuels are still dominant in this sector and a recurring political measurement in order to meet 2030 fossil fuel non-dependency is increased tax on petrol and diesel. Even though the CO2-emissions have decreased over the past ten years mostly due to better vehicle technologies and more effective engines, the demand however for petrol and diesel has not been affected by these price increases which has resulted in private households and business dependent on cars and other vehicles left with less funds for other necessary investments and may potentially hinder development and growth not only in the countryside.

Higher tax on petrol and diesel hits hard all over Sweden; not only the rural areas, and the government bill on even higher tax increase effects private house holds as well as businesses. The government elucidates only short-term consequences for households and businesses claiming them to be different than a recent study done by the Swedish Statistiska Centralbyrån (SCB). The SCB survey shows that nearly half a million house holds induce a tax increase at around SEK 5500 over the coming three years as a result of the government’s augment of tax not only during 2016 but also the following years totaling a tax increase of 48 % over the coming ten years. For a lot of people, in their everyday life such as commuting, leaving and picking up children from school, bulk buying and extracurricular activities, a realistic and tantamount alternative to the car is nonexistent. For those for which the car is indispensable, increased tax on fuel results in a negative private economy and then especially noticeable for those with a moderate income. Emissions has been reduced by 14 % and new cars has 32 % lower fuel consumption, although the numbers of cars and driving has increased. (Skattebetalarnas Förening, 2015) Approximately one million households drives more than 20 000 km yearly and historical fuel increase has not distinctly reduced the demand for petrol and diesel as shown in the diagram below (figure 1) where red is average price for diesel and petrol and blue is the demand volume from 2001 thru 2011 (Liberala partiet, 2015). In contrast to what this diagram shows, Per Bolund of Miljöpartiet who campaigns the government bill, gains support from researcher Roger Pydokke claiming that fuel tax is the most effective management control measure in order to impinge driver behavior (Einarsson & Forsblad, 2015).
Figure 1. Diagram of relationship between fuel price and demand 2001-2011. (Liberala partiet, 2015)

The government bill on increased petrol and diesel tax affects every fifth household negatively. The motorists are already paying for the society costs such as road wear and emissions by current taxes. Emissions has been reduced by 14 % despite parallel to an increase of motor traffic and total driving range clearly showing that the excise tax is not effective on embrittle driving behavior. More efforts should instead be done developing new technologies and fuel alternatives rather than “punishing” people dependent on the car. In greater perspective, the effects of increased fuel tax may hit local spending power and business competitiveness due to increased transportation costs. It seems the government bill is especially hitting the back-country where people often do not have an alternative to the car, bearing in mind that Sweden is one of Europe’s most sparsely populated country, but also effecting urban people negatively who needs the car in their daily life. Sweden would be better off if people and business could keep their money for investments and development and things they really need rather than the government increasing the costs for going to work, impair house hold economy, making everyday life more difficult and increasing business transport cost effecting growth and export making Sweden less competitive.

References
Einarsson, P. & Forsblad. M. 2015. Höjd bensinskatt minskar bilåkandet. Sveriges television. Acquired 2015-11-26 from http://www.svt.se/nyheter/inrikes/hojd-bensinskatt-minskar-bilakandet

Liberala partiet, 2015. Bensin och dieselpris. Acquired 2015-11-25 from http://www.liberalapartiet.se/2012/03/25/bensinskatt-har-ingen-effekt/bensin-och-dieselpris-001/

Skattebetalarnas förening, 2015. Högre skatt på bensin slår hårt över hela landet.
Acquired 2015-11-25 from https://www.skattebetalarna.se/sites/default/files/hogre_skatt_pa_bensin_slar_hart_over_hela_landet.pdf