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What is an Energy Tariff?

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  • Written By: Charity Delich
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 October 2014
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An energy tariff is a type of tax that is assessed on an energy product. For example, an energy tariff may be imposed on the sale or purchase of oil, electricity, coal, and gas. Energy taxes can be levied by local, state, provincial, or federal governments. Energy products can be taxed at significantly different rates from country to country. Even within the same country, energy tariff rates often vary widely from city to city or province to province.

In order to promote sustainable energy policies, some countries offer individuals and entities energy tariff credits for using renewable energy resources. For example, private citizens who use solar, wind, or biofuels as energy sources may receive income tax credits in some countries. Other countries give companies tax breaks for using renewable energy equipment or adopting sustainable business practices. Some countries attempt to reduce the use of non-renewable energy sources by levying energy tariffs on non-renewable energy products, such as petroleum or natural gas.

Regulations, customs tariffs, and restrictions often apply to energy products that are imported or exported between countries. These types of taxes and limitations are often either trade-specific or product-specific. In order to comply with import and export laws, importers and exporters may need to obtain country-specific certifications, licenses, or documentation.

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Before importing or exporting energy products between countries, importers and exporters must understand whether any import tariffs or export tariffs will apply to the transaction. An energy export tariff is a type of customs tariff imposed on energy products brought into a country. An energy import tariff, on the other hand, may be imposed on energy sources exiting a country.

Some countries require importers and exporters to obtain licenses in order to exchange energy goods between countries. Preferential duty rates may apply to some energy products, depending on whether any preferential trade agreements exist between the countries involved in the energy import or export transaction. In addition to assessing import and export energy tariffs, some countries impose energy charges on imported and exported products. A country may, for instance, levy anti-dumping duties on an energy product.

In the international energy trade market, many countries use a harmonized tariffs schedule when assessing an energy tariff fee. These kinds of schedules can help simplify trade tax calculation. Additionally, a harmonized tariff schedule can help ensure the correct fees are levied on energy products by allowing countries to classify energy products using internationally standardized names and numbers.

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anon960436
Post 5

The part I don't get now is the we are going to start getting taxed now using solar panels at our residencesm so it may come out to be more than using regular energy.

horsebite
Post 4

If you ask me, I think energy prices are high enough without putting yet another layer of taxes on them. We pay enough already. It seems like there are taxes and fees added to something every time you turn around. Enough already!

Nepal2016
Post 3

I can see the wisdom of some kind of regulation and tax system on energy. If nothing else, it guarantees some amount of revenue, since everyone needs energy. But it can have unintended consequences for poor countries, especially those who do not have their own sources of energy.

If an energy-rich country places a tariff on the energy they sell, it becomes even more expensive for their customers. This can leave some poor countries with an energy crisis if they cannot afford to pay the tax along with the cost of the energy.

Or, a country who places an import tariff on energy could see its own citizens without dependable access to energy if they can't pay the fee.

parkthekarma
Post 2

@ bigjim - Okay, you have a point there. Any tax or fee is a bad thing if it is overly punitive. But you have to look at the positive side of this kind of policy.

By making it more expensive to use the less clean forms of energy, and by taking the taxes and tariffs raised on those kind of energy and using part of them to subsidize the building of cleaner energy sources, over time the need for the tariff gets to be less, and we have a cleaner planet.

Also, these kind of fees make energy saving measures look appealing to more people, and make them think twice about wasteful practices and methods.

bigjim
Post 1

This is the kind of thing that sounds really good on paper, but it can have disastrous consequences. There is so much focus on "green energy" right now, which is a good thing where it makes sense, but it seems like it is getting out of hand.

Placing a tariff on things like oil, coal, and natural gas may serve a noble purpose of trying to cut down on pollution, but what is the alternative right now? Cleaner air is an admirable goal, but people need affordable energy to live their lives and conduct business. Especially with the economy being so fragile, governments need to be really careful with this kind of tariff.

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