New car registration taxes in the European Union would be abolished and road
taxes harmonised under a batch of recommendations announced by the European
Commission. Brussels said it was also examining ways of restructuring existing vehicle taxes so as to promote environmental objectives.

The main objective is to free the movement of cars within the EU's internal market, where the Commission identifies registration taxes as the biggest single obstacle. These taxes are applied in ten of the fifteen EU countries where they range from an average of Euro 267 euros in Italy to an astonishing Euro 15,659 in Denmark.

The Commission recommends their eventual abolition, to be replaced by annual road taxes and fuel taxes so that the tax burden would remain the same but related to the use of a car rather than its acquisition.

There should be "a certain degree of approximation of annual road taxes to prevent car market fragmentation," it says. The different ways in which car taxes are applied is a major factor in discrepancies in new car prices and prevents the motor industry from exploiting fully the internal market, the Commission says. It wants governments to make the necessary changes on a voluntary basis, but warns it may introduce legislation if they fail.

By Alan Osborn