• Changes to car taxes make case for registration tax

    The Netherlands and Portugal have this month introduced differentiations into their car registration taxes to encourage car buyers to opt for the cleanest models.

    In the Netherlands, the new registration taxes, payable when a car is sold to its first buyer, can earn the owner of a hybrid a discount up to €6000. Conventional cars are divided into seven categories (A-G), with the best cars bringing buyers a registration tax discount of €1000; the worst now cost their owners €540 more than they paid up to 30 June.

    The seven classes are based on fuel consumption, CO2 emissions and an efficiency indicator relative to other cars of a similar size.

    In Portugal, the new rules mean 10% of a car’s registration tax is differentiated according to CO2 emissions in four classes, with hybrid vehicles earning their owners a 40% reduction.

    T&E director Jos Dings said: “These new systems show how useful registration taxes can be and forms evidence supporting our view that mandatory abolition of registration taxes in the EU would be a bad idea. Member states can make good use of them to promote the introduction of greener cars.

    “Both the Dutch and the Portuguese systems, although a step in the right direction, are not perfect. The Portuguese system has only four CO2 classes, which is too blunt to have a big impact. Both systems give hybrids preferential treatment; we favour a technology-neutral approach becuase is is better to reward good performance than specific technologies.”

    Austria has had a registration tax based on fuel consumption for several years. Denmark, Finland and Greece also have registration taxes but so far have not differentiated them on the basis of CO2 or fuel.

    This news story is taken from the July 2006 edition of T&E Bulletin.