Brussels, 24/07/2002 (Agence Europe) - On Wednesday, the European Commission is to adopt (by written procedure) a communication on the taxation of private cars, confirmed European Taxation Commissioner Frits Bolkestein. The communication proposes that the Council approve general principles for phasing out registration tax over 5 to 10 years and for avoiding double taxation. The Commission would at a later stage present legislative proposals on the basis of these principles. The aim is to reduce fragmentation of the European automobile market and introduce environmental considerations in motor tax.
After the new competition rules on automobile distribution adopted last week, the draft communication this time tackles another cause of fragmentation on the European automobile market: registration tax on motor vehicles. This tax, which is levied in ten Member States (except Germany, France, Luxembourg, Sweden and Great Britain), varies considerably between Member States within a range of EUR 15,659 in Denmark to EUR 267 in Italy. The tax is at the centre of most complaints filed by European citizens and partly determines the price of private cars before tax. Member States with a large motor industry tend not to raise the registration tax or to apply quite a low registration tax. On the other hand, manufacturers must reduce their margin in countries that impose a high registration tax on motor vehicles to offset the cost in the sales price. This results in additional costs that affect the competitiveness of the European motor industry.
In order to abolish .tax obstacles on private cars, the communication recommends: 1) gradually reducing the registration tax levels preferably with an aim to abolish it altogether within 5 to 10 years; 2) transferring receipts from the registration tax to the annual road tax; 3) taking measures during the transitional period to harmonise the basis for assessment of road tax; 4) gradually increasing the excise duties on diesel fuel for private cars and in the medium term bringing them into line with taxes on lead-free petrol; 5) setting in place, without delay, a system for reimbursing the registration tax between Member States that apply this tax in order to avoid double taxation; and 6) establishing rules to also avoid double taxation for road tax. In order to reduce CO2 emissions, recommendations are: 1) establish in all Member States a motor tax basis for assessment that takes CO2 emissions into account for new vehicles; 2) tax company cars bearing these environmental considerations in mind.