The European Automobile Manufacturers Association (ACEA) is calling for a harmonized, cross-Europe CO2 tax on cars and alternative fuels.
The organization notes that CO2-based taxation offers a significant potential for CO2 reduction by shaping consumer demand and setting economic incentives to which vehicle manufacturers and fuel suppliers will respond.
A CO2-based taxation system raises customer awareness and gives a political signal that society attaches a priority to reducing CO2 emissions.
Currently, 11 EU member states (Austria, Belgium, Cyprus, Denmark, France, Italy, Luxembourg, The Netherlands, Portugal, Sweden, UK) have elements in their car and/or fuel taxation systems today that are totally or partly based on the car’s CO2 emissions and /or fuel consumption.
The ACEA argues that because the taxation systems are very different, they fail to send a clear market signal. Furthermore, manufacturers then face a fragmented EU market and are unable to exploit economies of scale, “to the detriment of their competitiveness.”
ACEA is proposing a harmonized system in which:
All existing car taxes/fees should be substituted by circulation tax to send simple and clear signals to consumers;
CO2 should be the key criterion for taxation to provide incentives to buy lower CO2 emitting cars;
Taxation should be technology-neutral to allow competition for the best solutions;
There should be no discrimination against certain types, segments or classes of vehicles;
There should be a linear proportionality to emitted CO2 g/km without cap, or in other words: every gram of CO2 emitted should be taxed the same, to avoid arbitrary thresholds;
Tax revisions should be budget neutral in transition from old to new schemes and should be adjusted over time to ensure budget neutrality.