Petroleum Product Subsidies: Costly, Inequitable, and On the Rise

 
Author/Editor: Piotrowski, John ; Coady, David ; Tyson, Justin ; Ossowski, Rolando ; Gillingham, Robert ; Tareq, Shamsuddin
 
Publication Date: February 25, 2010
 
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Summary: Petroleum product subsidies have again started to increase with the rebound in international prices. This note reviews recent developments in subsidy levels and argues that reforming the policy framework for setting petroleum product prices is necessary to reduce the fiscal burden of these subsidies and to address climate change. Between 2003 and mid-2008, global consumer subsidies for petroleum products are estimated to have increased more than eightfold, from $57 billion to $490 billion. Although subsidies decreased to $136 billion by mid-2009, they are projected to increase to $237 billion by end-2010 (or nearly 0.3 percent of global GDP). Tax-inclusive subsidies, reflecting sub-optimal taxation of petroleum products, are projected to increase to $733 billion, or 1.0 percent of global GDP. G-20 countries account for over 70 percent of tax-inclusive subsidies. Halving tax-inclusive subsidies could reduce projected fiscal deficits in subsidizing countries by one-sixth and greenhouse emissions by around 15 percent. Subsidy reform strategies should contain measures to mitigate the impact of higher prices on the poorest groups.
 
Series: Staff Position Note No. 2010/5
Frequency: Monthly
Subject(s): Subsidies | Taxes | Commodity price fluctuations | Fiscal reforms | Governance | Oil exporting countries | Oil product prices | Oil subsidies | Price stabilization

Author's Keyword(s): Petroleum products | subsidies | taxes | subsidy reform | pricing mechanism
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English
Publication Date: February 25, 2010
ISBN/ISSN: 9781455239108 Format: Paper
Stock No: SPNEA2010005 Pages: 21
Price:
Free
 
 
English
Publication Date: February 25, 2010
ISBN/ISSN: 978-1-58906-969-5 / 2072-3202 Format: A web quality merged PDF
Stock No: SPNET2010005 Pages: 20
Price:
Free
 
 
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