Many new cars sold in Germany are now exempt from ownership tax for one to two years.

The government proposed last week that buyers of new cars that meet certain environmental standards would be exempt from ownership taxes for a period of two years, as part of a measure to change the car ownership tax system and link charges to CO2 emissions. That proposal was adopted by the cabinet on Wednesday.

According to ddp news agency, the cabinet decided to allow the tax exemption for all new cars to give the car maket a boost. Cars that already meet Euro 5 and Euro 6 standards will remain exempt for two years.

Critics says that the incentive is worth an average EUR150 a year and, as such, is not enough to boost the market. The Verkehrsclub Deutschland (VCD), said the scheme would not help reduce fuel consumption or greenhouse gas emissions and that that vehicle manufacturers were being supported despite the fact that a switch to more fuel efficient vehicles is long overdue.

Economy minister Michael Glos defended the measures, saying "of course it is not a panacea," but it should encourage potential car buyers to get their old high-polluting cars off the road and replace them with more environmentally-friendly cars. According to the German vehicle manufacturers trade association, the Verband der Automobilindustrie (VDA), the average age of the German car fleet is around 8.5 years. If company cars are excluded the figure rises to more than 10 years.