EC proposes phase out of car purchase taxes; base usage taxes on CO2 emissions
Thu 07 July 2005
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The European Commission has proposed that car taxes across Europe should increasingly be based on vehicles' CO2 emissions to "encourage consumers to select more environmentally friendly cars." However, the Commission also proposes that taxes on purchase should be phased out to avoid double taxation.
Under the proposal - as reported in ENDS - Tax commissioner Laszlo Kovacs said that annual circulation taxes would be expected to take up the slack left by the removal of purchase taxes.
During the purchase tax phase out, both registration taxes and annual circulation taxes should become increasingly based on CO2 emissions the Commission says. The proposal includes minimum CO2 linking of 25% by 2008 and 50% by 2010.
Sixteen EU countries now impose a registration tax when vehicles are purchased or imported. The tax ranges as high as €16,000 in Denmark.
European environmental group T&E said the move to CO2-based taxation did not go far enough and would not lead to a drop in emissions. The removal of registration taxes might make cars appear cheaper by bringing down initial costs, and thus encourage car ownership, it added.
T&E would prefer that member states "retain the right to impose registration taxes" and link these to carbon emissions, "set at levels that genuinely encourage consumers to buy cleaner cars".
Acea, the European car makers association, said it supported the shift to tax on usage rather than ownership, but was concerned at a potential lack of uniformity across member states.
Related Links
EC press release link
T&E press release
ACEA website
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