All Western European Countries Will Have CO2-Related Car Taxation This Year; European Auto Industry Urges Harmonization of Schemes
07 April 2009
The number of EU countries with CO2-related car taxation rose to 15 in 2008. With Germany set to introduce CO2-related taxation in July of 2009, all Western European countries levy passenger car taxes that are partially or totally based on the car’s carbon dioxide emissions and/or fuel consumption, completing a trend that peaked in 2007 and 2008, according to the European Automobile Manufacturers’s Association’s (ACEA) Tax Guide 2008 published this week.
Romania was the first and so far only Eastern European Member State to introduce CO2-related taxation last year as part of a more comprehensive overhaul of vehicle taxation in the country. In most Central and Eastern European countries, the main concern of policy makers remains to reduce the level of old vehicles on the streets with pollutant emission standards of below Euro 3.
ACEA provides an overview of the CO2-based vehicle taxes here.
The annual Tax Guide gives an overview of motor vehicle taxation in the twenty-seven Member States of the European Union, the countries of the European Free Trade Association as well as Turkey. In 2008, motor vehicle taxes in the EU 15 added up to €378 billion (US$501 billion) or 4.1% of GDP.
The Tax Guide is compiled with the help of the national associations of motor vehicle manufacturers or importers in these countries and describes in detail the taxes that are levied on the sale, registration, ownership and the use of motor vehicles in each country.
ACEA says that the European car industry welcomes the clear trend towards CO2-related car taxation as fiscal measures are an important tool in shaping consumer demand towards fuel-efficient cars. The environmental results may, however, be negatively influenced by the widely varying systems in each country, ACEA notes. The European car industry urges EU governments to show more resolve in harmonizing car taxation schemes.
The car industry advocates a linear system, in which tax levels are directly proportionate to the car’s CO2 emissions and every gram of CO2 is taxed the same. Car tax schemes should neither include nor exclude specific technologies and be budget neutral in end-effect.
This is a good idea, though doesn't address the actual amount of gas consumed. A revenue-neutral gas tax is hard to avoid if a real dent is to be made.
Posted by: Will S | 07 April 2009 at 07:58 AM
There is a fatal flaw in CO2 Taxation plans. It is a tax on the working middle class. White collar workers are more likely to drive cars and blue collar workers are more likely to drive trucks. Every tradesman I know uses (needs) their truck.
Posted by: JosephT | 07 April 2009 at 08:05 AM
"White collar workers are more likely to drive cars and blue collar workers are more likely to drive trucks. Every tradesman I know uses (needs) their truck."
In general yes but one shouldn't hang a tax on that idea. Do you remember the SUV loophole? - Somebody in DC figured the blue collar worker needed big trucks so they gave them a tax credit. With the higher gas taxes here in Canada many of the tradesmen I know have found they really don't NEED a truck. What they do need is cargo space and that can be gotten in other ways than a pick-up; vans, stationwagons, trailers, even cars with the back seats removed are used up here.
When I heard about the SUV loophole and how Yuppies were using it to completely write-off their Hummers I thought up the 'signage credit' as an alternative. The SUV loophole was unfair to tradesmen because you HAD to drive a 8,000lb gas burning monster to get it. Every tradesman I know needs to advertise to get more business and its common practice to put some kind of signage on their vehicles so... the signage credit for anybody who puts their name, number and e-mail/web-address on their car. How many yuppies are going to do that?
Posted by: ai_vin | 07 April 2009 at 10:05 AM
As long as all the taxes point in the same direction, we should be OK - they give the same signals to the car manufacturers.
What matters is whether the taxes are linear (with rates increasing gram by gram) or stepped ( in 10 or 20 gm steps ).
From what I can see, a stepped approach seems better as it gives the car manufacturers clear goals to aim for. If you have a fully linear system, there is less incentive to try.
The trick then is to decide on the bands Europe wide - for instance, every 20 gms starting at 100 (or 80).
It doesn't matter what the tax rates are, as long as the CO2 thresholds are the same (and technology neutral).
You can see this happening with the Opel Zafira 7 seat van with a CO2 level of 139 gms.
When the price of oil goes back to $150, the people in Europe will be affected much less than the US, because they will already be driving very economical vehicles.
At 20 mpg, $4 gas is a problem, at 50 mpg, it isn't.
Posted by: mahonj | 07 April 2009 at 10:28 AM
A revenue neutral stepped (carbon related tax/registration fees/levies) would be more effective and may be easier to justify than more linear liquid fuel taxes, in highly developed and properly educated societies.
North American gas guzzler owners will always be against any type of carbon related taxes or levies just as smokers are/were against taxes on deadly tobacco products.
Tobacco can be banned but ground transport vehicles cannot.
A stepped malus-bonus system, based on carbon emission, could be one of the best approach. Owners of vehicles with more than 100 gm/Km carbon emission would pay much more (up to $1K / year) and those with vehicles below 100 gm/Km could receive a stepped bonus, up to $1K / year. (the 100 gm/Km reversal point could be adjusted-lowered every 3 years or so, as the fleet changes)
Existing liquid fuel taxes should be adjusted to the level required to build and maintain all roads/bridges in good/excellent condition.
Eventually, a road usage fee, based on miles/Km + weight of vehicles will have to be introduced to replace falling revenues from liquid fuel taxes. This has already been tested successfully (with GPS data) in a few areas.
Posted by: HarveyD | 07 April 2009 at 11:31 AM
HarveyD:
You like to use the tobacco analogy. However, as there is no evidence that atmospheric CO2 is a health hazard - how do you justify the stupefying expense to regulate a trace gas that fertilizes plant growth?
Get honest. If you need money for your programs, tax the fuel and forget the phony AGW hoax. As for tax breaks for vehicle types - let it be any vehicle duly registered as a "commercial" vehicle. Requiring proof of use in business.
Posted by: Reel$$ | 07 April 2009 at 12:18 PM
The SUV loophole was a horrible idea.
Vans are no better than Pick-up's on fuel consumption.
Trailers towed by vehicles that are not designed to tow can easily double fuel consumption, they are also a major safety hazard. Car chassis were never designed to do the work of a truck. Abusing cars just makes them wear out faster and is not economical in the long run.
Using the right tool for the job is ALWAYS the most economical.
Posted by: JosephT | 07 April 2009 at 12:24 PM
Rell$$:
In the land where greenbacks are allmighty and people have fully loaded credit cards, unpaid morgages @ 125% to 150% of property value and astronomical rising national debts; greener energy and/or transportation is a very hard sell.
However, a stepped malus-bonus system based on carbon emission could make HEVs and PHEVs much more affordable and more people could afford to buy them.
Europe and especially USA cannot afford to import 15 + million barrels of oil a day indefinately. Progressive & accellerated hybridization and electrification of our ground vehicles may become a necessity regarless of the AGW factor. Canada, with it's low population, has enough oil for a few more centuries and prevailing winds will blow most of the polution south of the border.
However, polution spreads out in the atmosphere and everbody will eventually get most of it.
Posted by: HarveyD | 07 April 2009 at 03:38 PM
"With Germany set to introduce CO2-related taxation in July of 2009".... looks like someone hasn't done their homework... Germany have been "set to introduce" CO2 based measures for over 2 years now, and every time the given date is reached, nothing has changed. Germany enjoys special priviliges in ACEA and is the only country for which the ACEA monthly pdf list of measures includes speculative measures. The reason for all this is that for many years now the German manufacturers have by far the highest CO2 emissions among European manufacturers. This also holds true for German car models such as Polo, Golf, Mercedes Class A etc (without even keeping in mind vehicle prices, which make matters even worse). If CO2-based taxation is introduced in July (this is at least the sixth time that such a promise is made) I'm going to run down the street naked with an elephant on my head.....
Posted by: Richard | 07 April 2009 at 07:31 PM
"I'm going to run down the street naked with an elephant on my head....."
Well... have fun! :)
Posted by: randomdude | 07 April 2009 at 10:50 PM
I don't agree with this kind of tax, simply because it is a tax on ownership, not use! I'd be pretty miffed if I owned, say a 25mpg weekender and drove, say only 5000 miles per year, but had to pay £400 pey year because it brached the 225gCO2/km threshold. Compare with someone in a 50mpg car, does 20,000 per year but only pays £120 per year. So who is doing the most damage, not only though greater use but through adding to congestion and so on.
I personally pay £185 tax per year for a car which I use occasionally (weekends and friends) because its a step short, according to the powers that be of being a 'gas guzzler' (198gmsCO2/km)
I already pay enough though fuel tax (which makes petrol £4+ per gallon), so why more simply to have my car sat on the street? If you ask me, its an incentive to drive more to get more value out of the tax you pay.
Posted by: Scott | 08 April 2009 at 04:31 AM
Scott:
The existing liquid fuel tax relates closely to distance travelled. Of course, the distance travelled per given fuel tax $$ will vary with the vehicle design, consumption, size, power and weight etc and that's fair enough.
There is nothing basically wrong with a vriable stepped fuel tax increase to generate enough revenues to pay for all roads/streets/bridges building and repairs and the active promotion of greener vehicles to reduce imported oil consymption.
Gas guzzler owners may not like $5 +/gallon fuel but it is of their own doing and choice. Very few people really need 2+ and 3+ tonnes monsters. A small light weight van (HEV or PHEV) could satisfy most requirements.
The days of my vehicle is bigger and faster than your may be over until we find a way to electrify those heavier/faster vehicles at a reasonable cost.
Posted by: HarveyD | 08 April 2009 at 07:52 AM
"I don't agree with this kind of tax, simply because it is a tax on ownership".
First of all the bonus-malus system in place across Europe (except Germany) isn't simply a taxation system. For most car buyers, it's actually a credit system where the State pays for 1000 or 2000 euros for the price of your vehicle, sometimes even more. This is what's known as the "bonus". To get this credit your car has to emit CO2/km below a certain threshold, which varies from country to country. In most cases you are eligible for the maximum credit if you buy a car today which emits around 100 g CO2/km or less. Sometimes furhter credit is avaiable for the purchase an EV.
Then there is the malus, a tax which sometimes goes beyond 3000 euros for large SUVs. Because of the two sides of the coin, in several cases these ssystems are self supporting, heavily taxing those people who still insist on SUVs or old technology, and distributing those taxes amongst buyers of frugal, efficient cars with the latest in green technology. Keep in mind that the EU is also party to the Kyoto protocol and have a legal obligation to drastically reduce CO2 emissions in limited timeframe. Given that road transport accounts for a whoppping 40% of these emissions, I think it's fair game for politicians to attack emissions in this sector which are deemed completely futile. Why you should even allow two people to do exactly the same thing with their cars, but allow one of the two to emit more than three times the pollution (and there ain't only CO2 in the exhaust) is beyond me. The EU are also addressing the other major sectors responsible for emissions. I don't understand why this concept still isn't in use in the US where the "user-pays" mentality is very strong. Surely if I were to say "the environment belongs to me, and to me alone!", people would find that rather funny, right?
Perhaps the more accurate term would be "tax on stupid ownership".
Posted by: Richard | 08 April 2009 at 08:22 AM
Get real. These politicians need money for their pet projects. This is just another way to justify theft. If and when everyone switches over to solar powered electrics this tax will not be rescinded. Once these thieves get their hands into your pocket it's permanent.
The Canadian value added tax was supposed to be temporary. The last time I checked the criminals raised it and it is now a permanent theft. For a time visitors to Canada were reimbursed the tax when they left the country. That too has been done away with. They never get enough.
Posted by: Mannstein | 08 April 2009 at 01:03 PM
Who cares if they don't rescind it as long as they don't collect it? How can they collect a fuel tax from me if I no longer go to the gas station?
Posted by: ai_vin | 08 April 2009 at 03:12 PM
Rather simply ai, they apply it to kWh used.
Posted by: sulleny | 08 April 2009 at 05:07 PM
Then it wouldn't be a "fuel" tax. This article is about CO2 related car taxation so as long as my car doesn't get its energy from the release of CO2 I wouldn't be paying the tax.
Posted by: ai_vin | 08 April 2009 at 09:21 PM
We drove to Florida and back this winter. We used about 120 gallons of fuel including $28+ in Federal and States fuel taxes.
On top of those $28+ we paid another $40+ as Highway and Bridges usage fees.
In a land where fuel taxes are taboo, road/bridges fees, which are often much higher but are so easily tolerated. NB: Road fees are even higher in Europe.
A progressive stepped extra fuel tax could replace all those rod usage fees. Gas guzzlers would of course pay much more than HEVs and PHEVs but it would be fully justified.
Widespread use of EVs would require another way to get equivalent revenues to build and repair roads and bridges.
A road usage fee based on distance and vehicle weight could be a fair way of doing it.
Posted by: HarveyD | 10 April 2009 at 12:49 PM
"A road usage fee based on distance and vehicle weight could be a fair way of doing it."
Yeah because it's the heavier vehicles that do most of the damage.
Posted by: ai_vin | 13 April 2009 at 11:19 AM