Report: Fuel smugglers costing Europe $4B+ in lost taxes

Filed under: Europe, Government/Legal

Euros in Fuel Tank

Cash-strapped European governments have been fighting a parasitic drain on their tax revenues from fuel theft and the tax fraud that goes along with it. According to a report from Bloomberg, individual governments are losing anywhere from 100 million to 1.3 billion euros ($133 million to $1.7 billion at today’s rates) due to the scams. The increase in theft and fraud is being blamed on a 52-percent jump in diesel prices.

Eastern European markets have seemingly been hit the hardest, with untaxed diesel estimated to make up 13 percent of Poland’s market, while the Czech Republic estimates that 20 percent of the fuel its citizens consume is provided illegally. In Lithuania and Poland, fuel is selling for 1.34 euros per liter and 1.30 euros per liter ($6.74 per gallon and $6.55 per gallon), respectively, while across the border in Russia, it’s 31.27 rubles per liter ($3.57 per gallon). This has led to a booming trade of both Poles and Lithuanians traveling across the border to purchase fuel legally, and a black market that’s seen Russian gas sold locally for less-than-local prices while still turning a profit. According to Bloomberg, 25 percent of Lithuanians admit to buying illegal fuel.

Western Europe hasn’t been immune to the scams, though. The Bloomberg piece opens with a bit on workers smuggling 912,000 liters of fuel out of a German refinery from the start of 2011 to last June. In Northern Ireland, black market diesel is 40 pence per liter lower than the UK’s average diesel price of 1.42 pound per liter (converted to USD, that’s $5.98 per gallon of illegal diesel to $8.33 per gallon of the taxed stuff).

As governments are a bit quicker to respond to things when their pockets are being lightened, several countries have tweaked their tax codes regarding fuel trades, closing the loopholes used by smugglers. Ireland has gone so far as to implement electronic monitoring for fuel movements. In Poland, the new coding is expected to slash illegal trade by 50 percent within four years.

Fuel smugglers costing Europe $4B+ in lost taxes originally appeared on Autoblog on Fri, 30 Aug 2013 11:32:00 EST. Please see our terms for use of feeds.

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