Business, Legal & Accounting Glossary
Bung taxes are enforced on sales of fuel. Fuel taxes imposed on different types of fuel are not uniform. Maximum taxes are imposed on products that are used to power automobiles. Lower taxes are seen on fuels that are employed in domestic use like heating oil and agricultural machines. Governments treat fuel taxes as a source of general revenue.
Fuel taxes are regarded as an inexhaustible source of revenue due to the relatively inelastic demand for automobile fuels like petrol and diesel. Adoption of more fuel-efficient vehicles may change the nature of demand. The invention of petrol substitutes and complementary fuel products will predictably lessen the demand for traditional fossil fuels.
Higher fuel prices tend to lessen the number of cars on the road. Greater fuel-efficient vehicles are also seen. On the flip side, lower fuel prices mean reduced revenues for the government. It has been computed that a 10% fuel price rise is accompanied by a 2.7% fall in fuel consumption. Lesser fuel consumption is computed to be 7% over a period of 10 years.
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This glossary post was last updated: 28th March, 2020 | 3 Views.