EU tax and single market commissioner Frits Bolkestein believes tax harmonisation will help remove new car price differences between EU countries and argues it makes more sense to gear taxation towards environmental goals.
He is recommending member states phase out registration tax and move to taxing road use, partly basing calculations on carbon emissions. Bolkestein has the backing of European Competition Commissioner Mario Monti who has said that once the block exemption regulations were finalised, the Commission would turn its attention to tax harmony.
“There could well be moves towards harmonisation, bearing in mind Monti's statement,” says RMI chief executive David Evans. “When the EU is enlarged as it takes on the aspiring countries, it will add to the difficulties over taxation if there isn't a sensible formula already in place.”
However, critics say the plans would be impossible to implement and fiercely opposed by national governments. “If they reduce taxes on ownership and place the emphasis on fuel, some countries like the UK have a high level of fuel tax and others would have to increase theirs to match,” says Prof Garel Rhys, head of automotive research at Cardiff Business School.
Consultant Stewart Whyte at Fleet Audits adds: “This is the last thing national governments will want to take up. It's a pie in the sky move by faceless bureaucrats.”