Swedish tax cuts make fuel six kroner cheaper per litre

Fuel prices are rising in Denmark, but motorists can save around six kroner per litre by filling up in Sweden, DR reports. Lower fuel taxes and the exchange rate are behind the difference.

Petrol and diesel prices in Denmark have reached very high levels, partly because of the war in the Middle East. But the cost is significantly lower across the water in Sweden.

Several residents of Bornholm therefore wait to refuel until they reach Ystad on the Bornholmslinjen ferry. One of them, Lasse Møller, saved more than 200 kroner by filling up in Sweden instead of Denmark.

“It is worth doing when we are here anyway. We do the same when we go home. Then we fill up again,” he said.

Sweden cut fuel taxes

According to FDM, motorists currently save around six kroner per litre on both petrol and diesel in Sweden.

Ilyas Dogru, a consumer economist at FDM, said one of the main reasons was taxation. The Swedish government has reduced fuel taxes to the European Union minimum and recently cut them even further, below that level.

Sweden applied in the spring for permission to go below the EU minimum tax rate on petrol and diesel. It was temporarily granted permission to do so.

That means the low prices could have an expiry date and could rise sharply if the tax relief ends, Dogru said. He pointed to Norway, where petrol and diesel prices rose significantly overnight after a tax exemption expired.

Denmark raised commuting deduction

The Danish government has chosen a different approach by increasing the commuting tax deduction. The measure does not benefit all motorists, however, but only those who travel more than 12 kilometres to work.

Dogru said Danish politicians could eventually consider cutting fuel taxes, but warned that doing so could increase demand for petrol and diesel.

“It is like putting out a fire with petrol, because you create more demand for something that is in short supply and that we otherwise want less of,” he said.

In addition to Sweden’s lower fuel taxes, the exchange rate also makes refuelling there cheaper for Danes. The Swedish krona has remained historically weak against the Danish krone for an extended period. One Swedish krona is equivalent to just 0.66 Danish øre.