Almost all west European countries now levy some form of CO2 tax on passenger cars a new study showed.
Go deeper with GlobalData
The survey by ACEA, the European Automobile Manufacturers’ Association, showed that over the past 15 months, France, Spain, Finland and Ireland introduced CO2-related car taxation.
This brings the total of EU member states with such a system up to 14, with Cyprus being the only new member state.
In addition, countries such as the Netherlands, Denmark and Portugal implemented significant changes to their existing schemes.
“The European car industry welcomes the clear trend towards CO2-related car taxation but warns that the environmental results may be negatively influenced by the widely varying systems in each country,” ACEA said in a statement.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“CO2-related taxation of cars and of alternative fuels are an important tool in shaping consumer demand towards fuel-efficient cars. Only a harmonised tax scheme, however, will give the necessary clear market signal which will be decisive in achieving the desired cuts in CO2 emissions,” added ACEA secretary general Ivan Hodac.
“The fragmentation of systems, furthermore, has a distorting effect on the internal market.”
ACEA said the European car industry is urging EU governments to show more resolve in harmonising car taxation schemes. EU finance ministers recently rejected the Commission’s proposal for a directive on car taxation.
“This is a missed opportunity on an essential issue and that, at a time when expectations about massively reducing CO2 emissions are high at the national level”, noted Hodac.
Current CO2-related car tax schemes differ widely across the EU. Italy, for example, offers a one-off incentive when purchasing a new car. France and the UK use CO2 emissions systematically for taxing privately owned and company cars.
Similarly, France, the UK and Luxembourg use CO2 emissions as the only factor for car taxation, whereas others apply a combination of criteria including car price, engine capacity and CO2 emissions.
Some countries – including new tax ‘bands’ due to take effect here in the UK – impose rather arbitrary cut-off points to increase tax rates in steps.
ACEA said 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,” ACEA added.
