Galim Khussainov
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Taxation · 1 min read

How Much Would It Cost to Shift the Vehicle Tax to a Fuel Excise Duty? A 2016 Calculation

Translated from Russian with the help of AI. Original: Russian version

Shifting the vehicle tax into the fuel excise duty would raise gasoline prices by about KZT 8.6 per liter and diesel prices by about KZT 1.39 per liter. The burden would be redistributed rather than increased, and part of it would fall on transit carriers.

A few more words on the vehicle tax.

Many commentators say that building the vehicle tax into the excise duty will raise the price of gasoline and diesel and put pressure on inflation in the country.

I would like to calculate how much the excise duty would need to rise to offset the revenue from the vehicle tax.

  1. Vehicle tax revenue totaled KZT 42.278 billion,

including

  • individuals: KZT 34.466 billion
  • legal entities: KZT 7.812 billion

It is hard to estimate how many of these vehicles run on diesel and how many on gasoline, but I think the State Revenue Committee has such data.

Let us assume that legal entities own mostly diesel vehicles and individuals mostly gasoline ones.

This means that, to offset the revenue collected from individuals, the cost of the vehicle tax would have to be shifted to gasoline,

and for legal entities, to diesel fuel.

Gasoline consumption in Kazakhstan is about 3 million tons a year, which corresponds to roughly 4 billion liters.

This means the excise duty per liter of gasoline would have to rise by 34.466/4 = KZT 8.6 per liter.

For diesel, consumption is about 4.6 million tons, or 5.6 billion liters.

This means the price increase for diesel would be 7.8/5.6 = KZT 1.39 per liter.

I do not think this is a critical increase in gasoline and diesel prices, and it will not affect inflation: for individuals the burden will not grow but will simply be redistributed, and the same is true for businesses.

In fact, the burden on individuals and legal entities will shrink, because part of the vehicle tax will fall on transit carriers, who refuel along the way. These are foreign vehicles crossing Kazakhstan. Given Kazakhstan's growing transport potential, budget revenue from transit will increase.

Published in: Facebook, 19 April 2016

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