|EU countries with CO2-based taxation policies by year since 2006. Data: ACEA. Click to enlarge.|
At present, 17 of the 27 EU Member States levy CO2-related taxes on passenger cars, and 15 governments provide tax incentives for electrically chargeable vehicles, according to the newly published European Automobile Manufacturers’ Association (ACEA) Tax Guide 2010. In 2009, motor vehicle taxes in the EU 15 amounted to €377 billion (US$505 billion) or 3.4% of GDP.
The seventeen EU countries that levy passenger car taxes partially or totally based on the car’s carbon dioxide emissions and/or fuel consumption are: Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom.
By April last year, sixteen Member States had CO2-related taxation, up from fourteen in 2008, eleven in 2007 and nine in 2006. New to the list are Germany, that introduced such system in the summer of 2009, and Latvia. Italy chose not to prolong its one-year fleet renewal scheme which included both CO2-based incentives and incentives for electric vehicles.
Incentives for electrically chargeable vehicles are now applied in all western European countries with the exceptions of Italy and Luxembourg. New to the list is Belgium. The Czech Republic and Romania take the number of Member States up to fifteen. The incentives mainly consist of tax reductions and exemptions, as well as of bonus payments for the buyers of electric vehicles.
ACEA says that the European car industry supports the further introduction of the fiscal incentives for fuel efficiency. Tax measures are an important tool in shaping consumer demand towards fuel-efficient cars, and help create a market for breakthrough technologies, notably during the introduction phase. Innovations generally first enter the market in low volumes and at a significant cost premium, and this needs to be offset by a positive policy framework.
ACEA says that the failure to harmonize tax systems weakens the environmental benefits that CO2-based taxation and incentives can bring. European automakers have long called for the abolition of car registration taxes which are still widely applied in the EU. Generally, registration taxes threaten fleet renewal. A harmonized CO2-based tax regime for cars should be a priority, the association says, applying a linear, technology-neutral system that is budget-neutral in end-effect. It would maximize emission reductions, support manufacturers and maintain the integrity of the single market.
In 2009, the market share of cars emitting 120 gCO2/km had risen to 25%. Cars with emission above 160 gCO2/km accounted for 23% of the market, compared to 39% in 2006 and to 80% in 1995.
The annual ACEA 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 and, for the first time, Brazil China, India, Japan, Korea, Russia and the United States.
The Tax Guide is compiled with the help of the national associations of motor vehicle manufacturers or importers and describes in detail the taxes that are levied on the sale, registration, ownership and the use of motor vehicles in each country.