Climate Change, Development & Aid, Environment, Europe, Headlines, Health

ENVIRONMENT-EU: Car Tax Will Not Solve Emissions Problem, Groups Warn

Stefania Bianchi

BRUSSELS, Jul 6 2005 (IPS) - New European proposals to reform car taxation will not result in reduced car emissions, warn environment and transport activists, but could instead have the undesired outcome of more pollution, road accidents and congestion.

The European Commission, the executive arm of the European Union (EU), proposed a new directive Tuesday to restructure member states’ car taxation systems and abolish car registration fees.

The Commission says the proposals “would not harmonise tax rates or oblige member states to introduce new taxes,” but instead, shift taxes to ensure that larger cars which emit more carbon dioxide – like sports utility vehicles (SUVs) – are taxed more.

The EU aims to make cars more environmentally friendly by recommending that tax brackets should be linked more strongly to the number of grams of carbon dioxide – seen as the leading culprit behind climate change – emitted per kilometre by a given vehicle.

The Commission proposes to phase out registration levies and restructure annual circulation taxes over a period of five to ten years.

Under the plan, which will need the backing of all the EU member governments, the Commission said charges based on emissions should make up 25 percent of the registration and circulation charges by the end of 2008, and should account for half of such tax revenues by 2010.

The draft also responds to a need “for action to eliminate obstacles to the free movement and transfer of passenger cars within the internal market, to tackle market fragmentation and to promote environmental sustainability”, according to the Commission.

“Following the extensive consultations that the Commission has conducted with stakeholders, we believe that there is strong support for the abolition of registration taxes which give rise to double taxation for European citizens and create fragmentation within the European car industry”, taxation and customs commissioner Laszlo Kovacs said in a statement Tuesday.

The carbon dioxide clause is in line with the EU’s environment commitments under the Kyoto Protocol on climate change, which commits the bloc to lowering its greenhouse gas emissions to eight percent below the 1990 level between 2008 and 2012.

Current car taxes are based on national criteria. Countries such as Germany tax engine size, others such as Sweden and Denmark impose high registration taxes for all cars, while Italy and Greece put low taxes on small cars and higher taxes on larger ones.

The Commission insists, however, that its proposals do not harmonise member states’ tax rates, or oblige EU countries to introduce new taxes.

The environmental watchdog group Friends of the Earth (FoE) welcomes the idea of introducing circulation taxes based on carbon dioxide emissions and hopes that the proposals will increase operating of highly polluting cars, such as “gas-guzzling” SUVs, and may increase the demand for more efficient cars.

However, the environmental group remains cautious about the proposals and says much will depend on how such a carbon dioxide-based tax is implemented.

“If the level of taxes according to carbon dioxide pollution is too low, it will have only little effect. Soaring oil prices, for instance, have hardly any effect on transport growth, as increasing costs for petrol are simply accepted rather than triggering a shift to more sustainable modes of transport,” Jan Kowalzig, climate change officer for Friends of the Earth Europe, told IPS Wednesday.

Kowalzig adds that any transport emissions-related policy must be measured against what it contributes to the fight against global warming.

“Increased car efficiency over the last years has been outpaced by total increase in transport demands, leading to an absolute rise of carbon dioxide emissions from the transport sector that now constitutes 25 to 30 percent of total greenhouse gas emissions in the EU,” he said.

“Will this proposal lead to absolute reductions of greenhouse gas emissions and does it contribute to the EU meeting its Kyoto target and the need to move to low-carbon beyond 2012?”

Kowalzig also fears that if the final agreement is too weak, it may only slow down growth of emissions levels by a few years “rather than trigger a real shift”.

Even more critical of the plans is the European Federation for Transport and Environment (T&E), Europe’s principal environmental transport organisation, which says the proposals should be “substantially revised” to reflect the growing negative impact of cars on the environment, human health and the economy.

“We are pleased that the Commission is calling for annual car taxes to be linked to emissions – but the ambition does not go far enough,” Jos Dings, director of T&E, said in a statement Wednesday.

“Member states should retain the right to impose registration taxes and they too should be linked to carbon dioxide emissions, and set at levels that genuinely encourage consumers to buy cleaner cars. We would also like to see additional incentives for the cleanest models and penalties for the biggest polluters. Only in this way will the EU get its exploding car emissions under control,” he added.

The EU’s 25 member states have to approve the Commission’s proposals before they can become law, but a date for the vote has yet to be set.

T&E is urging member states to reject the proposals to abolish registration charges when the vote takes place and says Commission plans to remove obstacles for transferring cars from one EU country to another will only serve to heighten the problem of pollution.

“It’s an incredibly blunt solution to a minor problem, namely the double-taxation of consumers that take their cars with them when they move to a member state that imposes registration charges. This plan will make cars cheaper in many countries – which is a gift to the car industry – but will increase car ownership and lead to more pollution, accidents and congestion,” he said.

If member states approve the Commission’s proposal, just 16 of them would be affected, as nine do not apply a registration tax anyway: Luxembourg, Germany, Sweden, Britain, France, Slovakia, Czech Republic, Estonia and Lithuania.