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The Diverse Structures of Passenger Car Taxation in Europe and the EU Commissions Proposal for Reform

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  • Uwe Kunert
  • Hartmut Kuhfeld

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 Euro-pean 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 neces-sary to modify and simplify the tax systems in Europe, because it is crucial that the traffic sector contribute 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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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.44380.de/dp589.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 589.

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Length: 22 p.
Date of creation: 2006
Date of revision:
Handle: RePEc:diw:diwwpp:dp589

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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, vol. 33(6), pages 757-775, April.
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Cited by:
  1. 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, vol. 28(1), pages 2-45.
  2. Hennessy, Hugh & Tol, Richard S.J., 2011. "The impact of tax reform on new car purchases in Ireland," Energy Policy, Elsevier, vol. 39(11), pages 7059-7067.
  3. 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 ersa10p1438, European Regional Science Association.
  4. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Trade-offs in CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," Working Paper Series 33_12, The Rimini Centre for Economic Analysis.
  5. 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 005, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research.
  6. 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 04-2012, University of Cyprus Department of Economics.
  7. 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 4652, The World Bank.
  8. 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.

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