Energy Prices and Taxes

Transcription

1 IEA Energy Statistics Training Week IEA, Paris, 3 March, 2016 Energy Prices and Taxes Mariano Berkenwald Energy Data Centre OECD/IEA 2016

2 Energy prices: why are they important? Energy prices: why are they important? Key statistical concepts Calculating end-use prices Moving to real prices Exercises 2

3 Energy prices: important to us all! Energy prices are constantly in the news, reflecting their importance to both individuals and society as a whole. 3

4 Energy prices vary across countries Energy prices can be differ greatly from one country to another depending on the availability of energy resources and government policy. Gasoline pump prices in 2014 (USD/liter) Turkey UK Israel Germany Ireland France Austria Hungary DR Congo Mozambiq Chile Peru Cambodia Armenia Canada Thailand China Swaziland India Ghana Indonesia Egypt Malaysia Nigeria Kuwait Saudi In 2014, consumers in Turkey paid 14 times more for gasoline than those in Saudi Arabia. Prices in bordering countries can be very different In 2015, Venezuela closed several border crossings with Colombia to stop informal fuel trade, equivalent to 100 kbbl/d of oil according to the Venezuelan government. Gasoline is more than fifty times cheaper in Venezuela! Sources: IEA Energy Prices and Taxes Database for OECD countries German Agency for International Cooperation for non-oecd countries 4

5 Energy prices can reflect global events Energy markets are global and changes in energy prices can often be linked to major events, fundamental economic developments and even natural disasters. Source: OECD Factbook Crude oil is traded in US dollars exchange rates can have a big impact for buyers! 5

6 Energy prices can change very quickly Movements in primary input prices affect end-use prices differently depending on each country s taxation policy. End-use prices for oil products in OECD countries and IEA crude import costs 1Q2014-4Q % 1Q2014-4Q % Energy Taxation Notes: Consumption-weighted average prices including taxes, using current exchange rates for Canada, France, Germany, Italy, Japan, Spain, UK and USA. Crude oil import price is for all IEA countries. Source: IEA Energy Prices and Taxes Database 6

7 A major expenditure for the economy Energy is a major cost for the economy and represents, on average, 8 to 10% of a country s Gross Domestic Product (GDP). Energy costs to GDP ratios for USA and OECD ( ) Source: Bashmakov,

8 A major cost for households and industry In addition to being a major and growing cost for industry, energy is responsible for 8-12% of household s total expenditures. Estimates for Households' direct expenditure on energy for selected OECD countries as a percentage of total household expenditure Slovenia Italy Denmark Sweden Netherlands Germany Portugal Canada Israel Finland UK USA Australia 0% 5% 10% 15% 20% In 2014, in Slovenia, over 15% of total household expenditure was on energy. 8 Source: OECD, National Accounts, detailed tables online, households final consumption expenditure Source: EC, Energy Economic Developments in Europe, European Economy 1/2014

9 Why taxes on energy? Taxes make up a big component of end-user prices and are implemented by governments to raise funds, compensate side-effects of energy use and to drive behavioural changes. Why do governments tax energy use? Average effective tax rates on energy in OECD countries Revenue raising Energy demand is relatively inelastic, making energy products good targets for taxation for revenue raising. Internalizing costs Compensating for environmental and health problems resulting from emissions. Driving change Taxes can provide signals aimed at changing behaviours. Source: OECD Centre for Taxation Policy, 2013, Taxing Energy Use 9

10 Key statistical concepts: Calculating end-use prices Energy prices: why are they important? Key statistical concepts Calculating end-use prices Moving to real prices Exercises 10

11 What do consumers pay? The concept of end-use price An end-use price is the sum of an ex-tax price and a tax component, which is made up of an excise tax and a value added tax. End-use price Total tax Ex-tax price Value added tax Excise tax 11

12 What is the ex-tax price? The ex-tax price includes everything except taxes. Ex-tax prices covers all costs before the product reaches the consumer: Raw materials Capital expenditure Production costs Transport and distribution Profit margins Everything except taxes Ex-tax Price 12

13 A tale of two countries: Ex-tax price EXAMPLE: Ex-tax price of gasoline for household use Ex-tax Price Excise Tax VAT rate % VAT amount Total Tax End-use price COUNTRY A 0.6 COUNTRY B

14 What is the excise tax? Excise tax is levied on a volume basis and is the result of government decisions. TAX Excise taxes are levied on a volume basis ( /litre) and include: Environmental taxes Carbon taxes Mineral oil taxes Emergency stock fee Labour market taxes EXAMPLE: Excise taxes of gasoline in Finland Energy/CO 2 tax Environmental damage tax Precautionary stock fee Oil pollution fee Source: IEA, Energy Prices and Taxes 14

15 A tale of two countries: Excise taxes EXAMPLE: Excise taxes of gasoline for household use Ex-tax Price Excise Tax VAT rate % VAT amount Total Tax End-use price COUNTRY A COUNTRY B

16 What is the value added tax? Value added tax Value added-tax (VAT) is levied on a value basis after all other taxes have been added. The total VAT amount is calculated as a percentage (VAT rate) Value added tax VAT is a consumption tax on value added and is calculated after all excise taxes have been added. Refunded to intermediate consumers (e.g. industry) In non-vat countries, the equivalent is Sales Tax As of 2015, over 160 countries had VAT or an equivalent (such as GST) in place. A further dozen are currently considering implementing it in the near future. Source: OECD, Centre for taxation policy 16

17 Who pays VAT? Value added tax In general, producers don t pay VAT as they deduct their own VAT payments from the VAT amounts received from consumers. Refiner GASOLINE CRUDE OIL 20$ + 4$ VAT 10$ + 2$ VAT Consumer VAT received 4$ - VAT paid 2$ Net VAT due: 2$ Oil Producer Tax Authority 17

18 A tale of two countries: Value added tax Value added tax EXAMPLE: Value added taxes of gasoline for household use Ex-tax Price Excise Tax VAT rate % VAT amount Total Tax End-use price COUNTRY A % COUNTRY B % 18

19 A tale of two countries: Value added tax Value added tax EXAMPLE: Value added taxes of gasoline for household use Ex-tax Price Excise Tax VAT rate % VAT amount Total Tax End-use price COUNTRY A % 0.12 COUNTRY B %

20 A tale of two countries: Total tax Total Tax EXAMPLE: Value added taxes of gasoline for household use Ex-tax Price Excise Tax VAT rate % VAT amount Total Tax End-use price COUNTRY A COUNTRY B

21 A tale of two countries: End-use price End-use price EXAMPLE: End-use price of gasoline for household use Ex-tax Price Excise Tax VAT rate % VAT amount Total Tax End-use price COUNTRY A COUNTRY B

22 A wide variety of prices across countries Thanks to the collaboration with professionals like you, the IEA can publish updated information on energy prices and taxes on a quarterly basis. Unleaded Gasoline Prices and Taxes Source: IEA, Energy Prices and Taxes 22

23 Test your knowledge! Do companies ultimately pay VAT?

24 End-use price Total tax Ex-tax price Is this kind of data available in your country? YES NO SOME OF IT 24

25 Key statistical concepts: Moving to real prices Energy prices: why are they important? Key statistical concepts Calculating end-use prices Moving to real prices Exercises 25

26 How to compute real prices? In order to compare energy prices over time, we need to correct the nominal values (current prices) by using an appropriate price index depending on the user. Real price Nominal price Price index A price index removes inflation so that, for example, diesel prices in 1995 and 2010 can be compared. CPI or PPI Consumer Price Index Producer Price Index 26

27 Calculating real price indices EXAMPLE: USA electricity prices for Industry Nominal Price $/MWh PPI (2010=100) Real 2010 Price $/MWh A B C =A/B Nominal price index Real price index, 2000=100 Source: IEA, Energy Prices and Taxes 27

28 Why do real prices matter? Nominal and real crude oil import costs (IEA average) Source: IEA, Energy Prices and Taxes Nominal Real (2014 USD) 28

29 Test your knowledge! Nominal Prices Real Prices Current Prices Constant Prices Prices in Value Prices in Volume 29

30 Test your knowledge! Which of the following is the opposite of real prices? Nominal prices vote 2 Unreal prices vote 3 Constant prices vote 4 30

31 How does IEA disseminate prices data? ENERGY PRICES & TAXES QUARTERLY STATISTICS Paper and pdf publication, CD-Rom and online data service Available at: MONTHLY OIL PRICE STATISTICS REPORT Free of charge. Available at OIL MARKET REPORT Monthly publication, online subscription 31

32 Thank you for your attention 32

33 Exercises Energy prices: why are they important? Key statistical concepts Calculating end-use prices Moving to real prices Exercises 33

34 Prices Exercises End-use prices The EPT questionnaire MS Excel in the EPT publication Country notes for details on all tax components Ex-Tax Price AUTOMOTIVE DIESEL price for NON-COMMERCIAL USERS per litre Excise Tax VAT % VAT Amount Total Tax Total Price A B C D E F 20X X X Q20X Q20X Q20X Q20X Q20X Q20X Q20X Q20X Q20X Q20X Q20X3 4Q20X3 =[F/(1+C)]-B =D/(A+B) =(A+B)*C =B+D =D/(A+B) =[F-(F/(1+C)] 34

35 Exercise basics (1) Exercise basics (1) The basic relationship: Total Price = Extax Price + Excise Tax + [(ExtaxPrice+Excise Tax)*VAT Rate] Please note: Ex-tax price = wholesale price + profit margin + charges Excise tax = all taxes except VAT VAT is usually given in % and VAT Amount = % x (Ex-tax price + Excise Tax) Industry does not pay VAT Sometimes households do not pay Excise Tax (in one exercise here...) 35

36 Exercise basics (2) Dealing with cyclical demand For example, heating oil is used more commonly during winter months Solution: Base the annual average price on a weighted average (by quarterly consumption) of the quarterly prices 36

37 Exercise basics (3) Basic end-use prices: Total average prices = Sum (all revenues) / Sum (all quantities sold) (or equally) Weighted average end-use prices: = Sum (expenditures) / Sum (all quantities consumed) Weighted average prices = Sum (prices x quantities) / Sum (quantities) (e.g. annual from quarterly data) Weighted average quantities: Weighted average calorific values = Sum (calorific values x consumption) / Sum (consumption) Weighted average VAT % = Sum (% x time periods) / Number of time periods (e.g. Jan.+Feb. at 15%, Mar. at 18% is calculated as [(15x2)+(18x1)] / 3) 37

38 Exercise basics (4) Pay attention to units!! Mass = Volume (m 3 ) x Density (kg/m 3 ) Standard m 3 = Normal m 3 x GCV amount = NCV amount / 0.9 (for natural gas) 1 kwh = 3600 kj 1 MWh = 1000 kwh 1 GWh = 1000 MWh 1 billion of currency ( ) = 10 9 Calculate quarterly results before calculating weighted average annual price from quarterly results. 38

39 Exercise basics (5) The basic relationship Total Price = Extax Price + Excise Tax + [(ExtaxPrice+Excise Tax)*VAT Rate] When only Total Price is available, work backwards: (1) Extax Price = [Total Price / (1 + VAT%)] Excise Tax (2) VAT = [Total Price (Total Price / (1 + VAT%)] 39