1. WHY IS GASOLINE SO EXPENSIVE?
April 25, 2013
Over the last few years, one of the biggest concerns for Salvadorans has been the rise of gasoline prices. Week after week,
Salvadorans’ drivers are waiting for any change in the price per gallon, because it affects how much they will spend on their car or
if they will have to limit their use.
Today CREO will tell you where does the price of gasoline comes from, why do we pay that much and how much of that payment
goes for the state in terms of taxes. Finally we will tell you where these taxes go.
WHERE DO FUEL PRICES COME FROM?
Importers, distributors and
service stations also pay entry
tax, IVA, storage, etc.. Some of
these costs are also reflected
in the remaining 79.2% (in the
case of “super”) and 78.4% (in
the case of “regular”).
VAT: 13% is applied to all fuels
generally. On previous occa-
sions there have been discus-
sions over the possibility of
removing it to reduce fuel
costs.
Road Maintenance Fund
(FOVIAL): 20 cents per gallon
are used to maintain the na-
tional road network and urban
network in El Salvador. This tax
has been charged at the driv-
ers since October 31, 2001.
Subsidies: The FEFE (18 cents per
gallon) to subsidize propane gas
and public transportation (10
cents per gallon) are charged
when you pay for gasoline. Do
drivers know that when they buy
gasoline, they pay for other type
of subsidies?
“REGULAR”
Based on $4.22 per gallon, the price of refer-
ence given by the Ministry of Economy (April 15
-29) .
From these $4.22, Salvadorans pay 91 cents of
a dollar in terms of taxes. These are distributed
as follows:
43 cents for “VAT”
18 cents for “FEFE”
10 cents for public transportation sub-
sidy
20 cents for “FOVIAL”
For each gallon of gasoline, Salvadorans pay
21.6% worth of taxes.
The other 78.4% comes from transport fuel
costs, an average of four weeks of oil products,
quality adjustment, insurance, and cost of ter-
minal station and wholesale margins.
If gasoline were not taxed, we would pay $3.76
(with VAT) or $3.31 (without VAT).
For every 10 gallons of regular gasoline $9.10
will go to the state.
“SUPER”
Based on $4.56 per gallon, the price of reference
given by the Ministry of Economy (April 15-29) .
From these $4.56, Salvadorans pay 95 cents of a
dollar in terms of taxes. These are distributed as
follows:
47 cents for “VAT”
18 cents for “FEFE”
10 cents for public transportation subsidy
20 cents for “FOVIAL”
For each gallon of gasoline, Salvadorans pay 20.8%
worth of taxes.
The other 79.2% comes from transport fuel costs,
an average of four weeks of oil products, quality
adjustment, insurance, and cost of terminal station
and wholesale margins.
If gasoline were not taxed, we would pay $4.10
(with VAT) or $3.61 (without VAT).
For every 10 gallons of regular gasoline $ 9.10 will
go to the state.
21.6%
79.2%78.4%
20.8%