Germany’s environment minister, Sigmar Gabriel, reported this weekend that the German coalition government has finally agreed on procedures for reforming the car ownership tax system to reflect CO2 emissions. However, the government has now said that no decision is expected to be reached before the summer parliamentary break.
According to early reports, Gabriel said that the government has agreed that only new vehicles will be subject to the new higher rates of tax. However, according to Automobilwoche, he has now confirmed that further agreement is needed on the actual rates of the new tax and how the revenue should be distributed between central government and the states.
Germany has been planning to replace its current ownership tax system, which is based on engine size, with one based on CO2 emissions, for some time. But the introduction of a new tax has stalled amidst arguments about whether old cars should be hit with higher costs. Under the new rules, only people buying a new car with low CO2 emissions will be able to reduce their tax exposure.
Another sticking point isthat the new tax should be collected by a national administration, and not by individual states, as has been the case in the past. According to the early German press sources all states have agreed to the new tax, as long as the revenue they would have received is replaced by a payment from central government. However, there are still many details to be agreed.
According to Automobilwoche, which quoted a German television source, the new tax will mean that most buyers of new cars will have to pay higher taxes than they do now. For example, the tax on a VW Golf with CO2 emissions of 168g/km will rise from EUR94 to EUR167. For a Porsche 911 with emissions of 328g CO2/km the tax will rise from EUR243 to EUR537. Only cars with very low CO2 emissions will see the tax fall, unless manufacturers offer more cars with low CO2 emissions.The finance ministry has already calculated the tax for around 500 models and variants. The tax will be lower for around 7% of new Volkswagen models and 10% of new BMWs. Later reports today suggest that these levels have not been agreed.
The new tax was originally scheduled for introduction in 2008, but it now appears that it will be at least 2009, or possibly 2010, before it is introduced.
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