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CO2-based taxation spreading across Europe

An increasing number of EU countries now levy CO2-based taxation or incentivise electric vehicles.

Currently, 17 EU countries levy CO2-related taxes on passenger cars, while 15 provide tax incentives for electrically-chargeable vehicles.

By April last year, 16 MemEU countries had CO2-related taxation, up from 14 in 2008, eleven in 2007 and nine in 2006.

New to the list are Germany, which introduced such system in the summer of 2009, and Latvia.

Italy chose not to prolong its one-year fleet renewal scheme which included both CO2-based incentives and incentives for electric vehicles.

Incentives for electrically chargeable vehicles are now applied in all western European countries with the exceptions of Italy and Luxembourg.

New to the list is Belgium. The Czech Republic and Romania take the number of EU countries up to 15.

The incentives mainly consist of tax reductions and exemptions, as well as of bonus payments for the buyers of electric vehicles, as will be the case in the UK from next year.

The European car industry said it supports the further introduction of the fiscal incentives for fuel efficiency.

"Tax measures are an important tool in shaping consumer demand towards fuel-efficient cars, and help create a market for breakthrough technologies, notably during the introduction
phase," said ACEA, the European motor industry representative body.

"Innovations generally first enter the market in low volumes and at a significant cost premium, and this needs to be offset by a positive policy framework.

"Governments must continue to include these CO2-efficient technologies and solutions in their overall sustainable mobility policy approach."

However, ACEA points out the the lack of tax harmonisation continues to cause the motor industry significant problems.

"Failure to harmonise tax systems weakens the environmental benefits that CO2-based taxation and incentives can bring," it said.

"European automakers have long called for the abolition of car registration taxes which are still widely applied in the EU. Generally, registration taxes threaten fleet renewal.

"A harmonised CO2-based tax regime for cars should be a priority, applying a linear, technology-neutral system that is budget neutral in end effect. It would maximise emission reductions, support manufacturers and maintain the integrity of the single market."

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