ACEA

CO2-related Taxation is a Must

European automotive industry advocates harmonised CO2-related taxation of cars and of alternative fuels in the EU

Shaping demand: CO2-based taxation of cars and of alternative fuels has a significant CO2 reduction potential by shaping consumer demand and setting economic incentives to which vehicle manufacturers and fuel suppliers will respond. A CO2-based taxation system raises customer awareness and gives a political signal that society attaches a priority to reducing CO2 emissions.

Significant potential: Recent experiences in some EU member states (the UK, the Netherlands and Sweden, for example) show that consistent taxation measures can have a significant influence on consumer behaviour and demand. Currently, sixteen EU Member States (Austria, Belgium, Cyprus, Denmark, Finland, France, Ireland, Italy, Luxembourg, Malta, The Netherlands, Portugal, Romania, Spain, Sweden, United Kingdom) have elements in their car and/or fuel taxation systems that are totally or partly based on the car's CO2 emissions and /or fuel consumption (click here for a full overview). The number of Member States with CO2-related taxation schemes is rising; in 2006 they were only nine. In addition, 15 Member States have introduced incentives for buying electric vehicles. (click here for a full overview)

No clear market signal yet: The current systems differ strongly across the EU and therefore fail to send clear market signals. Manufacturers face a fragmented EU market and are unable to exploit economies of scale.

ACEA proposes: The European car manufactures advocates a harmonised taxation of cars and of alternative fuels in the EU and has defined clear principles:

• All existing car taxes/fees should be substituted by circulation tax to send simple and clear signals to consumers;


• CO2 should be the key criterion for taxation to provide incentives to buy lower CO2 emitting cars;


• Taxation should be technology-neutral to allow competition for the best solutions;


• There should be no discrimination against certain types, segments or classes of vehicles;


• Their should be a linear proportionality to emitted CO2 g/km without cap, or in other words: every gram of CO2 emitted should be taxed the same, to avoid arbitrary thresholds;


• Tax revisions should be budget neutral in transition from old to new schemes and should be adjusted over time to ensure budget neutrality.

CO2-related taxation of alternative fuels should be based on the following principles:

• CO2 performance should be the main criterion, thus providing incentives for CO2 reductions


• Taxation of conventional fuels should provide a maximum ceiling. The tax rate for alternative fuel should then be lowered according to the CO2 advantage of the alternative fuel in question


• Certification of alternative fuels will be required to indicate their net CO2 performance


• The tax rate of an alternative fuel should be proportionate to the net CO2 emissions compared to the conventional fuel it substitutes

last updated 21/04/2010

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