Vehicle taxation (circulation & registration taxes)

FACT SHEET NO.: Cat-No.2 / Subcat-No.2.2-3

2. Taxation

2.2 Transport taxation

Vehicle taxation (circulation & registration taxes)

Vehicle taxes are imposed in numerous countries around the world. They can be levied annual (known as vehicle circulation tax), on the new vehicles' first registration, or on the changes of the vehicles' ownership as well. In many cases the revenue is earmarked and must be spent on transport infrastrucure. Tax rates are usually depend on the vehicle's environmental or engine performance, weight, age, or value. In the area of passenger cars the proper functioning of the Internal Market faces important problems. Disproportionate RT levels contribute considerably to pre-tax price differentials among Member State markets and keep car retail prices high. Concerning RT the tax bases and tax levels currently applied are very diverse and tax levels range, in extreme cases, between zero and 180% of pre-tax car price. Concerning the Annual Circulation Taxes (ACT) the tax bases used are equally very diversified and in absolute terms the average paid in 1999 ranged from 30 EUR/vehicle, to 463 EUR/vehicle. Road transport alone represents about 84% of all transport related CO2 emissions of which more than half is accounted for by EN 3 EN passenger cars. The genuine use of fiscal measures to meet Community's target of 120 g CO2 per Km is fundamental to the Community strategy. Fiscal measures provide a strong incentive value, for example, by encouraging the rapid renewal of the car fleet and influencing consumer's behaviour towards more fuel-efficient passenger cars. [5]

In all the 27 states of the european Comission

-to improve the functioning of the Internal Market
-to implement the Community's strategy to reduce CO2 emissions from passenger cars
-Ensures funding for road maintenance and development, discourages using of polluting vehicles or modes of transport.

Makes road transport less competitive (by rising the costs)

Low, but increasing impact (car pooling)

Favorable tax rates on low-energy vehicles can decrease fossil fuel consumption

[1] Goldman, T., Wachs, M. (2003): A Quiet Revolution in Transportation Finance: The Rise of Local Option Transportation Taxes. University of California Transportation Centre
[2] Shimizu, T., Tuan V. A. (2005): Modelling of Household Motorcycle Ownership Behaviour in Hanoi City, in: Journal of the Eastern Asia Society for Transportation Studies, Vol. 6, pp. 1751 - 1765
[3] Arianto A. Patunru, Kiyoyuki Minato, Masahiko Hori, Keiko Hirota (Eds.) (2009): Sustainable Automobile Society in East Asia. ERIA Research Project Report 2008-7, Appendix 2-1: Database Results
[4] European Automobile Manufacturers’ Association -ACEA (2012): Overview of CO2 based motor vehicle taxes in the EU
[5] European Commission (2005): COUNCIL DIRECTIVE on passenger car related taxes, SEC(2005) 809.