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Prices, Costs and Excise Duties: What’s What?


Inevitably, in any tax analysis, we would refer to prices and costs, salaries and production, prosperity etc. It is well known, although ultimately unjustified, the opinion that increasing indirect taxation, especially excise duties, will be reflected by prices and, further on, by inflationary escalations. This is the recent situation of the debate on the 7 eurocents that will be added to fuel excise duties. Of course, concerns regarding the explosion of gasoline and diesel prices immediately appeared. But, before introducing into the equation a few economic judgements, I believe it would be useful to understand a bit about excise duties.

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