What Taxes Make Up the Gasoline Tax?
3 Answers
Gasoline taxes are composed of six types of taxes: Consumption Tax and Value-Added Tax (VAT): The consumption tax on refined oil accounts for the second-largest proportion after the "base oil price," approximately 27%. Petroleum must undergo processes such as distillation and cracking reactions to become vehicle fuel, which inevitably generates added value. Therefore, each liter of gasoline also requires VAT payment. It is reported that the domestic VAT has been reduced from 17% to 16%, leading to an overall decrease in fuel prices. Urban Construction Tax: The full name of the urban construction tax is "Urban Maintenance and Construction Tax." It is a tax based on the actual VAT and consumption tax paid by taxpayers, meaning it has the characteristics of an additional tax. Corporate Income Tax: The corporate income tax included in fuel prices is generally calculated at a 7% profit rate. Education Surcharge and Local Education Surcharge: In the national tax system, the education surcharge is levied on units and individuals based on the consumption tax and VAT as the tax calculation standard. As long as there is "consumption tax" and "VAT," the education surcharge must be paid simultaneously. The revenue from the local education surcharge flows directly into provinces, municipalities, autonomous regions, etc., and the principle of payment is the same as that of the education surcharge.
As someone who frequently commutes by car, I always feel a headache when seeing the fuel bills, only to realize that the fuel price includes various taxes. The consumption tax is directly levied by the state and accounts for the largest portion, while the value-added tax is calculated based on each transaction's added value. There's also the urban maintenance and construction tax, specifically used for road repairs and public facilities, as well as the education surcharge and local education surcharge, which support education funds. A friend told me that these taxes combined can account for over 40% of the total fuel price—no wonder every fuel price hike tightens the household budget. In fact, these taxes aren't collected for nothing. For example, the urban construction tax does make roads smoother and driving safer, but as consumers, we bear a significant burden, especially now when the economy hasn't fully recovered post-pandemic. It would be great if tax rates could be optimized or subsidies increased to ease the burden on ordinary drivers like us. After learning about these taxes, I've become more mindful of fuel efficiency—regular car maintenance and reducing long-distance trips can help cut fuel expenses.
I've been driving since the 1990s and have witnessed the changes in gasoline taxes. Back then, the tax structure was simple, but now it's quite complex: the consumption tax is a fixed national levy on refined oil products, while the value-added tax fluctuates with oil prices, usually around 13%; the urban maintenance and construction tax is proportionally deducted from turnover taxes and used for municipal projects; the education surcharge and local education surcharge are additional levies supporting school operations. In my memory, as tax categories increased, fuel prices kept rising, significantly impacting daily commutes. Long-distance trips used to be easy, but now they require careful budgeting. These taxes are well-intentioned—the urban construction tax helped build new roads in my hometown, and education surcharges upgraded school equipment. But as a veteran driver, I hope for more tax transparency so people know where every penny goes. I think the gasoline tax structure is reasonable but needs to balance consumer burdens, especially during the green transition. Encouraging more public transport or electric vehicle use might be the future direction to prevent fuel costs from overwhelming household budgets.
