Portugal to Green Vehicle Taxation System

The Portuguese government has approved a new car taxation regime that would charge duty on road vehicles according to environmental impact from July 2007. The plans were first outlined in Portugal's climate change strategy and require both parliamentary and presidential approval to enter force.

Two new taxes, a one-off purchase tax (ISV) and an annual road tax (IUC), would replace the current fragmented vehicle taxation system. The tax level would be partially weighted according to engine size and CO2 emissions.

In the first year of the system 30 per cent of the tax would be weighted according to emissions; this would rise to 60 per cent from July 2008. Diesel vehicles would lose some existing fiscal advantages but the cleanest would be eligible for a E500 rebate.