GERMANY: CO2-based tax may apply only to new cars

By From just-auto.com | May 16 2007
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A new CO2-based car tax regime for Germany based on CO2  is likely to be applied only to new cars, just-auto has learned.

A report in Der Spiegel magazine at the weekend said all cars currently on the road would continue to pay annual tax based on the previous tax system. The new CO2-based tax would come into effect on 1 January 2008.

Any proposals made at this stage would be the basis for wide-ranging discussion within the government and individual states.

The German automotive industry trade association, Verband der Automobilindustrie (VDA), has recommended that a new tax system be applied to old cars. The VDA believes that if the system only applies to new cars there would be no incentive for people to replace their old cars with more environmentally-friendly new cars, according to the German Press Agency.

Spiegel said that the tax reform should be 'income neutral'. It should not generate neither increased nor less tax revenue.

Matthias Wissmann, president designate of the VDA, has said that "every gram of CO2 should be taxed equally. The higher the CO2 emissions, the higher the car tax".

Wissmann also followed his predecessor in calling for different treatments for different classes of cars. If this did not happen it would "discriminate against German cars and put jobs in Germany at risk. I will talk to [the EU government in] Brussels about this," he said.

Last week the German government agreed to make it cheaper for diesel car owners to retrofit diesel particulate filters (DPFs).

Those who fit a DPF will receive a tax rebate of EUR330 and those who do not will pay more annual tax, according to the German Press Agency. The rebate applies to DPFs fitted between 1 January 2006 and the end of 2009. From 1 April those who have not fitted a DPF will pay an extra EUR1.20 per 100cc engine capacity in annual car tax. This would mean paying an average of EUR25 euros a year.

Retrofitting a DPF costs around EUR600 euros. There are around 10m diesel vehicles in circulation in the country, of which around 6m could be retrofitted with a DPF.
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