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October 11, 2004

ITALY: Italy plans SUV tax and scrappage incentives

Reuters reports that the Italian government is planning to introduce a new tax on big polluting cars such as sport-utility vehicles, a move that could benefit Turin-based Fiat but meet some opposition from other European countries.

By bcusack

ITALY: Italy plans SUV tax and scrappage incentives

Reuters reports that the Italian government is planning to introduce a new tax on big polluting cars such as sport-utility vehicles, a move that could benefit Turin-based Fiat but meet some opposition from other European countries.

Environment Minister Altero Matteoli said taxes on the gas-guzzlers could be used to fund incentives for people to scrap old cars and buy more environmentally friendly ones.

The move in Italy could be expected to benefit market-leader Fiat, which is also a small car specialist.

“Taxing SUVs would not only be a tax on pollution but also on causing traffic jams,” Environment Minister Altero Matteoli said in an interview with Friday’s Corriere della Sera paper.

Earlier this year, France proposed raising taxes on SUVs but the plan was put on hold when Germany argued the move protected French companies that make smaller cars. A similar objection from Germany could be expected to head Italy’s way.
 
Matteoli said Italy’s Environment Ministry was working on a way of calculating road taxes depending on a car’s pollution level – the size of its engine, its registration year and the sort of fuel it uses. That would again benefit Fiat, whose fuel-efficient Multijet diesel engine is one of Italy’s best sellers.

Matteoli said he could reintroduce incentives for people to scrap old cars that spew out more pollution than new ones. State funded scrappage incentives have been used in Italy before and have acted as a huge market stimulus at times, to the obvious benefit of Fiat, although the policy has been presented in environmental terms.

“It isn’t fair to put a higher road tax on older cars that often belong to poorer people. (So we could) provide incentives for people wanting to change those cars, possibly using the money we get from taxing polluting cars,” Matteoli he said.

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