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EC considers new car tax rules

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by Brian Turner
EC considers new car tax rules

The European Commission is expected to announce plans this week for changes in how cars are taxed in the European Union.

The plans include eliminating car registration taxes as well as incentives to make cars more environmentally sound by linking taxes to carbon dioxide emissions.

Another aim of the change is to avoid taxing car owners who move from one nation to another from being taxed twice.

Laszlo Kovacs, the tax commissioner for the EU says he will propose that all car registration taxes be abolished within 10 years. That tax would be absorbed into each country’s annual car tax under Mr. Kovacs’ plan.

At present, car registration taxes are nonexistent in some member nations but can be as high as €16,000 ($20,000, £11,000) in others, such as Denmark.

The plan also calls for 50 percent of the car tax to be based on each vehicle’s carbon dioxide emissions by 2010.

The commission has been considering the changes since 2002 and is expected to present the plan to the finance ministers of member nations during the British presidency of the EU, which begins on July 1.

It is thought that approval of the new plan might be difficult for a couple of reasons.

To begin with, some finance ministers are against tax proposals from the EU on principle. Additionally, the plan would have both short-term and long-term effects on the revenues of each nation.

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News posted: June 20, 2005

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