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Tax incentives on rise in EU

By / 7 years ago / Latest News / No Comments

The ACEA's annual tax guide highlights that 17 EU member states are now levying CO2-related taxes on passenger cars, while 15 governments provide tax incentives for electric and ultra-low carbon vehicles. Amongst the EU15 the total amount of vehicle taxes paid amounted to €377 billion or 3.4% of GDP in 2009.

By April last year, 16 member states had CO2-related taxation, up from 14 in 2008, 11 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 it welcomes the trend. In a statement the association commented: '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.'

'Electric mobility will make an important contribution towards ensuring sustainable mobility. However, advanced conventional technologies, engines and fuels will further play a predominant role for years to come. Governments must continue to include these CO2-efficient technologies and solutions in their overall sustainable mobility policy approach.'

However, it called for a harmonised approach.

'Failure to harmonise 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 harmonised CO2-based tax regime for cars should be a priority, applying a linear, technology-neutral system that is budget neutral in end effect. It would maximise emission reductions, support manufacturers and maintain the integrity of the single market.'

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