Report finds that registration and company car taxes have most direct impact on low carbon choices

A new report from T&E, the Brussels-based NGO finds that the way EU governments tax cars has a considerable impact on the uptake of more fuel-efficient vehicles. Countries with the lowest levels of CO2 from new cars tend to have registration and company car taxes that are strongly graduated according to carbon emissions and have the greatest influence on car buyers’ choices.

 

The final part of T&E's report , ‘How clean are Europe’s cars? 2014’, finds that where initial registration taxes (purchase taxes) and company car taxes are steeply differentiated by CO2, such as in the Netherlands, Denmark and France, this has resulted in significantly lower average fleet emissions.

 

By contrast, Germany, Poland, Czech Republic, Sweden, Finland and Austria are amongst the countries with the highest CO2 emissions from new cars and they have the weakest national tax policies

 

In 2013, the Netherlands achieved the lowest CO2 emissions from new cars of all 28 EU countries at 109 g/km. T&E's analysis also showed that the Netherlands achieved the second best overall reduction across Europe since the introduction of binding CO2 limits for new cars in 2008, at 30,4%. This performance, it says, is largely due to a registration tax that is steeply differentiated by fuel economy, as well as exemptions from circulation tax for very low-carbon vehicles including electric cars.

 

The Netherlands also has a strong differentiation against CO2 emissions of the taxation of ‘benefit in kind’ payments for company cars, which were further revised downwards in 2012 and subsequently continue to incentivise the purchase of the lowest-emitting cars.

 

Diesels now represent about half of all new cars sold in the EU. But this is not case in the Netherlands, where only one new car in four is a diesel, and in Denmark (one in three). These two countries have specific taxation surcharges on diesel aimed at penalising their contribution to air pollution, which have effectively discouraged their purchase.