Push to end Belgium’s ‘company car paradise’

January 31, 2015

Three Belgian NGOs have handed in a petition to the country’s federal parliament aimed at getting the Belgian government to end its favourable treatment of company cars. The three NGOs, including T&E member Bond Beter Leefmilieu (BBL), collected 25,000 signatures protesting about a fiscal regime in Belgium that makes it more lucrative for employers to pay their staff through company cars and company fuel than by giving them more money.

Company cars are vehicles owned or leased by companies which are made available to employees for both personal and business travel. A report in 2009 by the Copenhagen Economics consultancy said company cars accounted for about half of all new car sales in the EU. Because of this, the kind of cars companies choose has a strong influence on the car fleet on the roads, as many company cars spend most of their life as private cars after they have been sold on.
Different countries have different treatment of company cars, but a recent report by the OECD says most countries treat only 50% of the personal benefit to employees from company cars as taxable.
A survey of congestion in 2014 showed Brussels and Antwerp as the two most congested cities in Europe. The trio of environmental groups that have launched the petition say this is hardly surprising, as treatment of company cars in Belgium encourages motoring. Indeed in recent months the three biggest banks in Belgium have put an extra 10,000 company cars on the road.
Belgium is also in the midst of a political debate about shifting taxes from labour to consumption and pollution, and a big element of the petition was a call for company car subsidies to be used to fund lower labour taxes. A statement accompanying the petition said: ‘Hundreds of thousands of Belgian workers have a company fuel card with which they can fill up with diesel free of charge, while the government wants to save hundreds of millions from its public transport budget. If that seems absurd, it’s because it is!’
The OECD report says current company car tax rules increase the distance driven, which in turn harms the environment, and that not taxing the distance driven (as opposed to the cost of the car) is the most harmful feature of most company car tax systems – both environmentally and socially. The Copenhagen Economics study estimated EU governments were losing €54 billion a year in lost revenue from company car taxation, and the welfare losses in distortions of consumer choice were estimated at between €12bn and €37bn.
The three Belgian NGOs who launched the petition were BBL, Kom op tegen Kanker, and Netwerk Duurzame Mobiliteit. The petition received support from leading economics professors and all the leading national newspapers.

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