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OECD: fuel subsidies benefit those with higher incomes

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The OECD believes that indiscriminate fuel subsidies to limit the impact of price increases are a mistake in economic and ecological terms. Along these lines, they invite us to correct them in order to direct aid to families and companies that are in difficulty and in need.

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In a report released Monday, the Organization for Economic Cooperation and Development (OECD) explains with figures that these subsidies in practice stimulate the demand for fossil fuels and discourage the limitation of consumption.

The authors emphasize that in the 42 countries analyzed, the use of US$ 246,000 million is expected to contain the escalation of energy prices between October 2021 and December 2022, of which US$ 169,000 million (66% of the total) to reduce the price of fuel.

94% of those US$ 169,000 million will benefit all consumers indiscriminatelythat is, regardless of your income level or other similar criteria.

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As for the remaining 34% of the funds, earmarked for income support measures, 73% are specifically directed to reach those most in need.

In view of these data, the OECD considers that “the energy crisis, with concerns about security due to the war in Ukraine, underlines the need for governments adopt synergies between climate and energy security policies”.

In other words, “accelerating the transition to carbon neutrality would help protect consumers from movements in the market and geopolitical changes, in addition to supporting international climate objectives.”

The organization points out that although fuel subsidies are devices that are very easy to apply due to their simplicity, in practice can disproportionately benefit large energy consumers, that is, “often those with higher incomes”.

In addition, cutting prices with public money can limit the signals that those same prices give to favor energy saving or to dispense with fossil fuels.

With information from EFE.

Source: Larepublica

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