Brussels, 20/06/2005 (Agence Europe) - László Kovács, the Commissioner for Taxation and Customs Union, presented a small group of journalists with an outline of the legislative proposal which he will submit to the College on 22 June with a view to restructuring on a gradual basis the current taxation regimes for passenger cars. The proposal will introduce new parameters to vehicle tax bases in order to better link these taxes to sustainable development objectives. According to the Commissioner, it should bring “more transparency” and help to “reduce differences in price by 25%” as well as reducing “cases of double taxation” - a situation which is “contrary to the principles of the internal market” and which demonstrates the “fragmentation of the car market”. In order to dispel any doubt, László Kovács took great pains to underline that the Commission's objective is not to introduce a new tax, nor to harmonise the rates imposed. Three days after the European Council, he does not expect any opposition from his colleagues motivated by national reasons, but admits that the Member States' Finance Ministers could have difficulties and would probably want to reassure themselves that the proposal would not bring any negative budgetary consequences.
Mr Kovács proposes first to “abolish step by step the registration tax” which has to be paid at the time of purchase or when a passenger car is first put into circulation. Over a period of “five to ten years” this tax would be gradually “integrated into annual road tax” - the likeliest option - or “into the fuel tax”. In line with the sustainable development objectives defined in the Kyoto protocol, the proposal also suggests restructuring and bridging the national tax bases for the registration tax and annual road tax in order to establish a more direct link between the level of taxation and emissions of carbon dioxide (CO2). László Kovács indicated that account taken of CO2 emissions in the “general tax” (in a case where the registration tax is shifted entirely onto the annual road tax) could reach “25% by the end of 2008 and 50% by the end of 2010”.
In July 2004, the Commission launched a public consultation on the possibility of eliminating registration tax (EUROPE 8753). The result of this consultation was that 95% of the 2000 people who responded said that the application of 25 different tax regimes for passenger cars was the source of fiscal barriers and distortions which affect the functioning of the internal market. Double taxation (and the absence of a system for recouping the tax) is the barrier most often mentioned (73%), followed by price-gaps not including tax and including tax for consumers (63.5%), and the fragmentation of the passenger car market. In 2002 the Commission published a communication on taxation of passenger cars in the European Union, indicating that in that year ten Member States levied a registration tax (EUROPE 8776). The base and the level of taxes applied varied widely from on Member State to another in a range from zero to 180% of the price of the vehicle before tax. In 1999 the registration tax varied in absolute terms between 15 659 euros in Denmark and 267 euros in Italy.