Fuels taxation in the context of tax reforms in the Czech Republic

Journal of Tax Reform. 2023;9(1):34–46 34 eISSN 2414-9497 © Krajňák M., 2023 Original Paper https://doi.org/10.15826/jtr.2023.9.1.127 Fuels Taxation in the Context of Tax Reforms in the Czech Republic Michal Krajňák1, 2  1 VŠB-Technical University of Ostrava, Ostrava, Czech Republic 2 Moravian Colleague Olomouc, Olomouc, Czech Republic  [email protected] ABSTRACT The article evaluates the development of the tax burden and its influence on fuel consumption in the Czech Republic in the years 2001–2022. Petrol and diesel are subject to universal and selective indirect taxation. Using the methods of analysis, description, comparison, synthesis and regression and correlation analysis, it is analysed whether the tax burden of these products is constant despite minimal tax reforms or whether it is changing. To assess the real tax burden, the effective tax rate indicator is calculated. Input data for the analysis consists of average fuel prices and tax rates in the analysed period. Compared to the first analysed year – 2001 and the last analysed year 2022, the value-added tax rate increased by one percentage point. Selective excise duty rates also increased by about 1 CZK., The results of the analysis examining the development of the tax burden using the effective tax rate show that the tax burden on fuel is constantly changing. However, this is not due to many tax reforms in this area of taxation. The reason is mainly the unit type of tax rate for excise duties. This fact causes the increase in the price of fuel leads to decrease the percentage of tax to the total price of fuel, and the tax burden thus develops regressively. Excise duties and value-added tax have a negative effect on consumption. In the context of tax theories, one of the reasons for the higher tax burden on fuels is the limitation of their consumption. It can thus be concluded that in the Czech Republic, these taxes are fulfilled. At the same time, the high tax burden creates relatively stable revenues for the state budget. This fact confirms the importance of excise duties. KEYWORDS diesel, effective tax rate, excise duty, petrol, tax burden, tax reform, value-added tax JEL C10, H29, H31, K34, Q41 УДК 336.201 Налогообложение топлива в контексте налоговых реформ в Чешской Республике М. Крайнак1, 2 1 Остравский технический университет (VŠB), г. Острава, Чешская Республика 2 Моравский колледж Оломоуц, г. Оломоуц, Чешская Республика  [email protected] АННОТАЦИЯ В статье оценивается налоговая нагрузка на топливо и ее влияние на потребление топлива в Чешской Республике в 2001–2022 гг. Бензин и дизельное топливо подлежат универсальному и селективному косвенному налогообложению. С помощью методов анализа, описания, сравнения, синтеза и регрессионнокорреляционного анализа анализируется, остается ли налоговая нагрузка на топливо постоянной, несмотря на минимальные налоговые реформы, или она меняется. Для оценки реальной налоговой нагрузки рассчитывается показатель эффективной налоговой ставки. Исходными данными для анализа явля- Journal of Tax Reform. 2023;9(1):34–46 35 eISSN 2414-9497 ются средние цены на топливо и налоговые ставки за анализируемый период. По сравнению с первым анализируемым 2001 г. и последним анализируемым 2022 г. ставка НДС увеличилась на один процентный пункт. Выборочные ставки акцизного сбора также увеличились примерно на 1 крону. Результаты анализа динамики налоговой нагрузки с использованием эффективной налоговой ставки показывают, что налоговая нагрузка на топливо постоянно меняется. Однако это не связано со налоговыми реформами в этой области налогообложения. Причиной в основном является изменение налоговой ставки по акцизам. Этот факт приводит к тому, что рост цены на топливо приводит к уменьшению доли налога в общей стоимости топлива, а налоговая нагрузка при этом развивается регрессивно. Акцизы и НДС отрицательно сказываются на потреблении топлива. В контексте налоговых теорий одной из причин более высокой налоговой нагрузки на топливо является ограничение его потребления. Таким образом можно сделать вывод, что в Чешской Республике эти налоги уплачиваются. В то же время высокая налоговая нагрузка создает относительно стабильные доходы государственного бюджета. Этот факт подтверждает важность акцизов на топливо. КЛЮЧЕВЫЕ СЛОВА дизельное топливо, эффективная налоговая ставка, акциз, бензин, налоговая нагрузка, налоговая реформа, налог на добавленную стоимость 1. Introduction Fuels such as petrol or diesel are burdened in their sales price by indirect taxes such as value-added tax and excise duties, specifically tax on mineral oils. Tax reforms changing tax rates on mineral oils are not very frequent in the Czech Republic or many other European countries. However, the research question remains whether the tax burden of these commodities is also unchanged. In the Czech Republic, the Excise Tax Act governs the taxation of mineral oils. Nowadays a valid law was created as part of the tax reform on January 1, 2004. However, fuel was also subject to excise duty until this date. From 2004 until the end of 2022, the provisions of the law regarding tax rates changed minimally. The tax reform in 2010 increased the burden on both commodities by CZK 1. In 2021, the excise duty rate for diesel has been reduced to the value originally valid in 2004–2009. Due to the increase in fuel prices in 2022, there was a temporary reduction in excise duties rates on mineral oils by CZK 1.50. Compared to other taxes, it can be assumed at first sight that the tax burden on fuel is constant and unchanging since few reforms were changing this tax rate. The development of excise duties tax rates on diesel or gasoline since 2000 is documented in Figure 1. 0 2 4 6 8 10 12 14 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CZK/l Years Diesel Petrol Figure 1. Tax rate for diesel or petrol Source: own processing Journal of Tax Reform. 2023;9(1):34–46 36 eISSN 2414-9497 Mineral oils are subject to selective tax and universal indirect tax, i.e., valueadded tax. There have been more changes in this area compared to excise duties. Tax rates varied only in the order of one percent. More detailed information is provided by Figure 2. The article aim is evaluating the development of the tax burden on fuel in the Czech Republic from 2001 to the end of 2022. Are there only minimal changes in the tax burden, or is the real amount of the tax burden changing even though no tax reform has taken place? How does the tax rate affect fuel consumption? The following analysis in this article will answer all these questions. In the article, the first analysed year is 2001, and the last is 2022, representing a time series of 22 years. Such a long time series provides a reliable basis for performing the analysis. The examined period is also limited by the availability of data on prices, or fuel consumption, which the Czech Statistical Office has fully published since 2001. Another goal is to evaluate the development of fuel consumption – petrol and diesel in the context of the implemented tax reforms affecting the fuels tax burden. Does the consumption of these fuels increase as the tax burden decreases? The structure of the article is as follows. The introduction mentions the basic aspects of the issue and the research questions. The following section deals with an overview of research studies already carried out in this area. The main part is the chapter evaluating the tax burden and fuel consumption development. The final part is focused on summarizing new findings from this analysis. Following the above analysis of the current situation, it is possible to formulate the hypothesis that the tax burden on fuel does not change significantly in the Czech Republic. The reason for this hypothesis is only minimal tax reforms in excise duties. 2. Literature Several studies have analysed aspects of fuel taxation. For example, the price elasticity of fuels in connection with the taxation of these products was examined. Hammar et al. [1] or Damania & Fredriksson [2] mentions that fuel demand is highly price elastic. It follows that if the goal is to reduce fuel consumption, the way to achieve this goal is to increase the tax burden. When determining the tax burden, it is necessary to consider and distinguish price elasticity in the short and long term [3]. This study also mentions the need to consider the specifications and differences of each country. This is confirmed by the findings of Ghoddusi et al. [4]. The above studies show that price elasticity is essential in imposing any tax. This elasticity affects the consumption of the commodity that is burdened by the tax. According to the conclusions of Akkaya & Hepsag [5], on the contrary, the demand for fuels is rather a price inelastic, so an increase in the tax burden on petrol or diesel does not lead to a drastic reduction in consumption. The fact that a tax reform increasing the fuel tax rate may not lead to a more significant re17 18 19 20 21 22 23 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 % Years Figure 2. Tax rate of value-added tax Source: own processing Journal of Tax Reform. 2023;9(1):34–46 37 eISSN 2414-9497 duction in the consumption of these products is also evidenced by the analyses carried out in research Harju et al. [6] or Coglianese et al. [7]. Harju et al. [6] among other things, emphasize that the factor that determines consumption is, for example, territory. The consumption and price elasticity of fuel in a big city differs from the price elasticity in villages. These differences arise especially when the price of fuel increases, and it can take up to one year for these differences to balance out. Coglianese et al. [7] also mention that it is necessary to consider whether the possible tax reform will increase or decrease the tax burden. If, for example, a reduction in the tax burden is expected, consumers will postpone fuel consumption. Porcher & Porcher [8] chose an alternative approach – the Markov-switching approach – when investigating the effect of the tax burden on fuel consumption. The conclusions of the analysis indicate that consumers react quite strongly to an increase in the tax burden on fuels. Using the Markov-switching approach, Boroumand et al. [9] confirmed that higher price elasticity is when fuel prices rise. And that, whether with an increase in the tax burden or an increase in oil price. Conversely, fuel sellers and consumers react less flexibly to a decrease in the tax burden of oil prices. One of the reasons for applying excise duties, in general context of tax theories, is the reduction of the consumption of harmful products. The consumption of fuel is characterized according to Parry et al. [10] by certain harmfulness, and thus it can be stated that the goal of a higher tax burden is the reduction of consumption. Stinson et al. [11] mention that it is also possible to approach the construction of excise duties in an alternative way. This consists of the existence of tax advantages and reliefs. However, this approach has not been widely adopted in the field of excise duties, which is also evidenced by the results of the David [12]. David [12] also discovered that the amount of excise duties cannot be imposed precisely in the amount of damage caused by the consumption of a specific commodity burdened with an excise tax. In that case, the tax burden would have to be four times greater. Kamruzzaman & Mizunoya [13] investigated the effect of fuel taxation on consumption in Bangladesh. It was found that by taxing fuels, their consumption decreased by approximately one-fifth. Similar conclusions regarding the effect of fuel taxation on fuel consumption in China were found by Xiao & Ju [14]. The effects of fuel taxation on consumption were also analysed by other studies, e.g., in Japan by Tanishita [15], which also states that the tax burden on fuels reduces their consumption. Despite this fact, however, fuel consumption is developing in an increasing trend. The study does not agree with the idea of an alternative approach, e.g., in the form of tax reliefs or higher taxation of cars, for example, stated by [11]. Studies analysed fuel taxation from a more comprehensive perspective of several countries, e.g., in the countries of the European Union were also done. According to Kantarci [16], the average tax burden on gasoline in the countries of the European Union is around 66%, and on diesel around 61%. Shao et al. [17] also mention a high tax burden, which, on the one hand, is beneficial to limit environmental harm. On the other hand, such a high tax burden can reduce economic growth. Fukui & Mioyshi [18], analysing the effect of fuel taxation on consumption in the USA, states that when the tax burden increases, consumption of these fuels decreases in the short term. On the contrary, when assessing these effects in the long term, the decrease in consumption is less significant than in the short time. Gordeev & Galeeva [19] investigated fuel taxation in Russia. An increase in excise duty by about 0.4 rubbles per litre would be reflected in a decrease in consumption by about 1%. As Bjertnaes [20] mentioned, ecological aspects should also be considered at legislation of fuel taxes. In practice, as the study states, this would mean a reduced Journal of Tax Reform. 2023;9(1):34–46 38 eISSN 2414-9497 tax rate for vehicles with lower average fuel consumption. According to Shao et al. [21], another way to increase the tax burden of these commodities through indirect taxes could be stimulating the behaviour of economic subjects towards ecologically desirable activities in the form of subsidies. During reforms dealing with fuel taxation, it is desirable to discuss according to results Carvalho & Guillen [22] not only the issue of tax rates. Tools for changing the consumption of commodities can be, for example, the elimination of cases in which the use of items such as petrol or diesel is exempt from excise duties. Hájek et al. [23], using multi-panel regression analysis, found that emission allowances are a tool to limit the consumption of environmentally harmful commodities. During tax reforms changing the tax burden of excise duty commodities, the government must consider the commodity’s tax burden and the impact on state budget revenues and adjust the tax mix accordingly. This is also related to changes in other direct or indirect taxes. Janoušková & Sobotovičová [24] found that, for example, land taxation in the Czech Republic is very low compared to other countries. Municipalities have the option of applying coefficients to increase tax revenue. However, only approximately 10% of municipalities use this option. The results of the study by Andrejovská & Glova [25] show that a high tax quota can have a negative effect on economic growth. There are cases when a higher tax burden is justified, e.g., by the exclusivity or attractiveness of a specific place or product. Thottoli & Mamari [26] mention that when setting up new taxes or changing existing ones, communication between the government and citizens is necessary so that citizens understand the meaning and purpose of the tax changes. From the overview of research studies, it follows those fuels, unlike e.g., basic foodstuffs, are characterized by a higher tax burden. This tax burden ensures stable tax revenue, on the other hand, it also limits fuel consumption. Limiting fuel consumption is positive from an ecological point of view, but it can cause a reduction in economic growth. Thus, studies confirm that there is dependence between fuel consumption and the level of taxation. 3. Data and Methodology 3.1. Data The input data for the analysis is a database for the period from 2001 to 2022. The availability of data limits the analysed period. To fulfil the objective of the article, the following data are used for analysis: 1) Average price of diesel and petrol1; 2) Diesel and petrol consumption in analysed years2; 3) Excise duty rates for diesel and petrol, and value-added tax rates. The average price of diesel, petrol and the consumption of diesel and petrol were obtained from the above sources. Value added tax rates from the applicable Value Added Tax Act, petrol, or diesel tax rates from the Excise Act. The total tax burden of 1 litre of diesel or petrol was also calculated for analysis purposes. Furthermore, the effective tax rate was determined. 3.2. Methodology The article uses standard scientific methodology including methods of description, analysis, synthesis, and comparison. To assess the real tax burden on petrol, or for diesel, the effective tax rate indicator (1) is used, , VAT ED i TT ETR P + = (1) where ETR is the effective tax rate, TVAT is value-added tax, TED is excise duty and Pi is the price of 1 litre of fuel in an analysed year. In contrast to the nominal tax rate, it is possible to display the real tax burden using the effective rate indicator [27; 28]. 1 Average price of Petrol and Diesel. Prague: Czech Statistical Office, 2023. Available at: https:// www.czso.cz/csu/czso/ceny-pohonnych-hmotod-roku 2 Consumption of Diesel and Petrol. Prague: CEPRO, 2023. Available at: https://www.cappo. cz/cisla-a-fakta/spotreba-pohonnych-hmot-v-cr Journal of Tax Reform. 2023;9(1):34–46 39 eISSN 2414-9497 The tax rate on diesel and petrol is of unit type, while the value-added tax rate is of ad-valorem type [29; 30]. To determine whether the tax burden on fuel is constant, progressive, or regressive according to the development of the price of a litre of fuel, can be formulated (2–4), , HL ETR ETR< (2) , HL ETR ETR> (3) , LH ETR ETR= (4) where ETRH is the effective tax rate expressing the tax burden on fuel at a higher selling price, and ETRL is the effective tax rate at a lower selling price. If equation (2) applies, the tax burden develops regressively. Equation (3), on the contrary, confirms the progressive development of the tax burden. Equation (4) shows the constant development trend. Modelling the dependence of fuel consumption on the tax burden of excise duty and value-added tax will be performed using regression analysis [31; 32]. The equation expressing the dependence of petrol consumption on excise duty and value-added tax is determined by the formula (5), 0 11 22 ,Yb bX bX=+⋅ +⋅ (5) where Y is the amount of the petrol consumption, X1 is the amount of excise duty on petrol per 1 liter and X2 is the amount of value-added tax per 1 liter of petrol. The dependence of diesel consumption on the amount of excise duty on diesel and value-added tax can be expressed similarly. It is captured by equation (6), 0 11 22 ,Yb bX bX=+⋅ +⋅ (6) where Y is the value of diesel consumption, X1 is the amount of excise duty on diesel per 1 litre, and X2 is the amount of value-added tax on 1 litre of diesel. 4. Results 4.1. Descriptive statistics Before performing the dependency analysis, a section containing the basic descriptive statistics of the analysed variables in Table 1 is sorted, i.e., the price of diesel, the price of petrol, the consumption of diesel, the consumption of the petrol, the rate of excise duty per litre of diesel, the rate of excise tax per litre of petrol, the valueadded tax on 1 litre of diesel, or the value-added tax on 1 litre of petrol. 4.2. Evaluation of the development of the tax burden on fuel Fuels such as petrol and diesel have the same tax rate in the context of universal indirect tax – value-added tax. What differs, on the other hand, is the excise duty rate. For both commodities, it is of the unit type, but its amount is different. Diesel has a lower rate. From the point of view of value-added tax, the standard tax rate is applied for the entire analysed period 2001–2022. From 2001 to 2003, it was 22%. In 2004 decreased to 19%, from 2013 to the present, the rate is 21%. Table 1 Descriptive statistics Unit Mean Value Median Minimum Maximum Price of diesel CZK/Litre 30.173 30.03875 21.743 43.438 Price of petrol CZK/Litre 30.885 30.27 24.364 41.743 Consumption of diesel Kilotons 4145.227 4125.5 2561 5154 Consumption of petrol Kilotons 1790.591 1783.5 1468 2103 Rate of excise duty for diesel CZK/Litre 10.170 10.45 8.15 10.95 Rate of excise duty for petrol CZK/Litre 12.260 12.84 10.84 12.84 Value-added tax of diesel CZK/Litre 6.168 6.072 4.734 9.122 Value-added tax of petrol CZK/Litre 6.318 6.170 5.089 8.766 Source: own calculation Journal of Tax Reform. 2023;9(1):34–46 40 eISSN 2414-9497 Assessing the tax burden only based on nominal tax rate values is incorrect. Better reporting power is provided by the effective tax rate. The development of these rates for petrol and diesel is shown in Figures 3 and 4. The tax burden on petrol has changed in the analysed period. Tax reforms increasing the rate of excise duty on petrol took place in 2004 and 2010. Despite this fact, when the nominal tax rate increased, the real tax burden, on the contrary, decreased. The most significant decrease occurred at the end of the analysed period. In 2022, on the other hand, the excise duty rate was reduced, and the petrol price increased simultaneously. These facts caused the real tax burden to fall. Conversely, the value-added tax burden in percentage terms remains almost unchanged over the analysed period. Also, the results presented in Fig. 4 confirm that the tax burden on diesel does not change linearly. The excise tax reform between 2003 and 2004 increased the rate of excise duty on diesel, which also led to an increase in the effective tax rate. On the contrary, the value added tax rate was reduced by three percentage points. This fact caused the overall tax burden on diesel to decrease. In 2010, the rate of excise duty on diesel was increased by CZK 1. Paradoxically, the effective tax rate has decreased. Nominal tax rate was unchanged until the end of 2020. Nevertheless, according to Fig. 4 there are changes in the real tax burden. The reason for this is the fact that it is a unit-type tax rate. Thus, the tax burden of 1 litre of fuel does not change only in terms of an absolute figure. A factor significantly affecting the value of the effective tax rate is the price of this product. 0 10 20 30 40 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ETR in % Year Petrol Tax ETR VAT ETR Figure 3. ETR petrol Source: own calculation 0 10 20 30 40 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ETR in % Year Diesel Tax ETR VAT ETR Figure 4. ETR diesel Source: own calculation Journal of Tax Reform. 2023;9(1):34–46 41 eISSN 2414-9497 If both effective tax rates (value-added tax rate and excise duty rate) were added together, the value of the total effective tax rate for petrol would be close to 60%, and for diesel around 55%. In the case of petrol, these are values that are also common in other countries, in the case of diesel, the tax burden is slightly lower. On average, the tax contributes to the price of fuel, according to the results of Kantarci et al. [16] around 60%. Using the correlation analysis in Table 2, it will be evaluated whether there is a dependence between the effective tax rate and the price of petrol and diesel. If confirmed, it will subsequently be determined whether this dependence is direct i.e., the tax is progressive or indirect, indicating the regressive character of the development of the tax liability. From the data of the correlation matrix presented in Table 2, it follows that there is an indirect degree of very high dependence between the price of the commodity – petrol and diesel and the effective tax rate. As the price for each litre of fuel increases, the real tax burden thus decreases. And this is although no tax reform adjusting tax rates took place. For this reason, the overall tax burden on fuel is developing regressively. Conversely, if there is a decrease in fuel price, the percentage of tax on the price increases. The reason is that the amount of excise duty remains the same in absolute terms. Thus, when the price increases, only the value-added tax increases absolutely, the same when it decreases, only the value-added tax decreases absolutely. Table 2 Correlation analysis Diesel price Petrol price ETR diesel ETR petrol Diesel price 1 Petrol price 0.986 1 ETR diesel –0.855 –0.844 1 ETR petrol –0.887 –0.887 0.975 1 Source: own calculation 4.3. Evaluation of the impact of the tax burden on consumption The results of the partial analysis showed that, although tax reforms in fuel taxation were rare, the tax burden was different in the analysed years. Not only the tax burden changed, but also the volume of fuel consumption. The research question of this part is whether this tax burden affects the level of fuel consumption. The answer to this question is provided by the results of the regression analysis in Table 3. The dependence of petrol or diesel consumption on the tax burden of excise duty and value-added tax is analysed. Table 3 Regression analysis Model 1 – Diesel Model 2 – Petrol Coef. Sig. Coef. Sig. X1 – Valueadded tax –281.8 0.018 –105.6 0.007 X2 – Excise duty –417.8 0.003 –145.09 0.005 Constant 1842.01 0.122 4236.9 0.001 Observation 22 22 R20.790 0.832 F-test 15.8 0.001 21.3 0.001 Durbin-Watson test 1.880 1.918 Source: own calculation In the case of model 1 expressing the dependence of diesel consumption on the tax burden, the equation has the form (7), 12 281.8 417.8 1842.01.y xx=− − + (7) In the equation, both variables are statistically significant. The R2 coefficient expressing the quality of the regression model indicates that the model describing the dependence of diesel consumption on the tax burden is of sufficient quality. The value of the F-test and the result of the Durbin-Watson test are also statistically in accordance with the requirements for regression modelling. More about the F-test e.g. [33], about the Durbin-Watson test e.g. [34]. In accordance with the recommendation of O’Gorman or Pinelis [35; 36], a significance level of 5% is chosen. Journal of Tax Reform. 2023;9(1):34–46 42 eISSN 2414-9497 It follows from equation (7) that the tax burden on fuels reduces their consumption. This can be stated based on the negative values of the coefficients Xn in the equation. Regarding the strength of the effect on consumption, this value is higher for the excise duty. This conclusion is logical since excise duty also had a higher effective tax rate than value-added tax. The stated results agree with the results of studies [14; 21; 37]. The model of the dependence of petrol consumption on the tax burden is captured by equation (8), 12 105.6 145.09 4236.9.yxx=− − + (8) The conclusions of the analysis regarding the effect of taxation on petrol consumption are identical to the research regarding diesel. Value-added tax and excise duty reduce this consumption. Again, a higher negative effect is demonstrated for excise duty, as coefficient X2 increases more than coefficient X1. On the contrary, what is different between equations (7) and (8) are the values of these coefficients in the regression equations. Taxation of diesel has a more significant effect on consumption than petrol. This is related to the different price elasticity of demand for petrol and diesel [38]. The conclusions thus agree, for example, with the study by Tang & Sjoquist [39] that the effects of the same tax on different fuels may not be the same, even if the principle of how the tax works is similar. One of the reasons why this tax is part of the tax system is to limit the consumption of petrol or diesel [40], which, as the results of this analysis confirm, is fulfilled in the case of the Czech Republic. 5. Discussion Excise duty and value-added tax make up more than half of the final sales price. In the context of comparison with other countries, it was found that the Czech Republic does not show significantly higher or lower values in this regard. The above can be compared, for example, with the results of the study Kantarci [16]. Especially tax burden of petrol is at a similar level to other OECD countries. A study investigating the fuel tax burden in the context of consumption in the Czech Republic has not yet been conducted. However, the results found can be compared with those of other studies. The regression analysis results confirmed that excise duty, particularly, impacts fuel consumption and that the tax burden is a factor in reducing this consumption. These results agree with studies [1; 10]. On the contrary, these conclusions deviate from the findings of studies [5–7]. It is precisely the high tax quota for petrol and diesel that aims to limit the consumption of these fuels. It must be emphasized that the reduction of this consumption is not only due to excise duties but also to value-added tax. Although, as the analysis results show, the value-added tax’s effect on reducing consumption is smaller. In the context of the fuel type, the tax burden has a higher impact on diesel consumption than petrol consumption. This is valid although tax rate for diesel is lower than tax rate for petrol. It is thus also possible to identify with the conclusions of studies [13–15]. It is also necessary to consider that diesel and gasoline do not have the same degree of price elasticity of demand, which agrees with the study’s conclusions of Akkaya & Hepsag [5]. Based on the data on the development of fuel consumption, it is in accordance with the conclusions Boroumand et al. [9] about the different degrees of price elasticity when fuel prices rise and fall. The relatively high tax burden on fuel can be viewed from two points of view. One of them is the fact that the high tax burden limits the consumption of these products. This is a positive from an ecological point of view. However, the conclusions of studies [20-22] demanding consideration of environmentally friendly behaviour have not yet been implemented into the tax legislation regulating this area of taxation. Currently, there are no plans to implement discounts or tax bonuses into the legislation governing excise duties.