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The diverse structures of passenger car taxation in Europe and the EU Commissions proposal for reform

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  • Kunert, Uwe
  • Kuhfeld, Hartmut

Abstract

In this study we first analyze duties on passenger cars in 27 European countries. Taxes and fees related to the registration, ownership and use of cars are assessed differently across Europe, and their rates vary significantly. We find that the annual taxes levied on specific types of cars differ across countries by a factor of up to four, while the various kinds of duties levied account for extremely diverse shares of the entire car-related tax burden and give rise to very different ratios of fixed and variable components in the taxes levied. Given the importance of taxation systems for market and competitive conditions, the European Commission is seeking to achieve reciprocal alignment of the various systems. The Commission has also proposed that greater importance be given to environmental criteria in the assessment of vehicle-related taxes. Effectively in some countries, the registration taxes represent a significant burden on the acquisition of new vehicles; this factor reduces market transparency and may mean that taxes are levied twice. Only in a few countries' tax schemes is fuel consumption taken into account, and then only to a marginal degree. It is thus necessary to modify and simplify the tax systems in Europe, because it is crucial that the traffic sector contributes more to climate protection, and because motor vehicles impair local air quality. In this context, the overall structure of the various charges to passenger cars should be rebalanced, with CO2 emissions not being the sole focus.

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Bibliographic Info

Article provided by Elsevier in its journal Transport Policy.

Volume (Year): 14 (2007)
Issue (Month): 4 (July)
Pages: 306-316

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Handle: RePEc:eee:trapol:v:14:y:2007:i:4:p:306-316

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  1. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, Elsevier, vol. 33(6), pages 757-775, April.
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Cited by:
  1. Laurence Turcksin & Olivier Mairesse & Cathy Macharis & Joeri Van Mierlo, 2013. "Encouraging Environmentally Friendlier Cars via Fiscal Measures: General Methodology and Application to Belgium," Energies, MDPI, Open Access Journal, vol. 6(1), pages 471-491, January.
  2. Karst Geurs & Henk Meurs, 2011. "The Dutch national road pricing scheme: review of appraisal studies and impacts for the Dutch car market and the environment," ERSA conference papers, European Regional Science Association ersa10p1438, European Regional Science Association.
  3. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Trade-offs in CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," Working Paper Series, The Rimini Centre for Economic Analysis 33_12, The Rimini Centre for Economic Analysis.
  4. Hennessy, Hugh & Tol, Richard S.J., 2011. "The impact of tax reform on new car purchases in Ireland," Energy Policy, Elsevier, Elsevier, vol. 39(11), pages 7059-7067.
  5. Timilsina, Govinda R. & Dulal, Hari B., 2008. "Fiscal policy instruments for reducing congestion and atmospheric emissions in the transport sector : a review," Policy Research Working Paper Series, The World Bank 4652, The World Bank.
  6. Aileen Lam, 2013. "Projections of future emissions and energy use from passenger cars as a result of policies in the EU with a dynamic model of technological change," 4CMR Working Paper Series, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research 005, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research.
  7. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, Elsevier, vol. 28(1), pages 2-45.
  8. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Assessment of CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," University of Cyprus Working Papers in Economics, University of Cyprus Department of Economics 04-2012, University of Cyprus Department of Economics.

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