MEPs back EU plans for pollution based car tax

PLANS for an EU-wide pollution-based car tax were backed by MEPs yesterday.

The European Commission has voted to scrap registration tax on new cars and replace it with the pollution tax.

It wants to scrap variations in national car and road taxes in the 25 EU member states in favour of a standard taxation system centred on carbon dioxide emissions.

They want to force car manufacturers to produce more environmentally-friendly cars, and stop them hiking the pre-tax price in some countries.

Ireland has the highest taxes on new cars with VRT (Vehicle Registration Tax) 30% of the value plus 21% VAT making some vehicles much more expensive than in many other EU countries.

While car buyers on the continent can shop cross border for bargains, saving themselves up to €4,000 on a new vehicle, Irish motorists cannot as they must pay VRT and VAT when importing a car.

Labour Party Dublin MEP, Proinsias De Rossa, challenged the Government to change the current method of taxing vehicles.

“The Government must face up to the chaos caused by 25 EU countries having 25 separate systems of taxing private cars and at the same time they could make some real progress on protecting the environment,” he said.

But not all Irish MEPs agreed with him and Fine Gael’s Gay Mitchell said the EU should not interfere with Ireland’s taxation policies.

The EU hoped the single market would force car dealers and manufacturers to compete across the EU for customers and so reduce their prices.

But instead they have continued to vary their prices according to the country the cars are sold in. The market is further confused by the different levels of taxes imposed that vary from 0% to 180% of the pre-tax cost of a new car.

The European Commission would like all car registration taxes phased out over 10 years and replaced with Annual Circulation Taxes linked to the cars’ carbon dioxide emissions.

The European Parliament went a step further yesterday by saying that the level of tax should be linked to not just carbon dioxide emissions, but other pollutants produced by vehicles too.

Transport accounts for 18% of CO2 emissions in Ireland. Mr De Rossa argues the less environmentally damaging the car is, the less the owner would have to pay.

“We need imaginative steps like this if we are to stand any chance of reducing the threat of global warming,” said Mr De Rossa.

The Government is against any change in the way cars are taxed. Any decision on introducing a new way of taxing cars will have to be agreed unanimously by all member states first and the Parliament has only an advisory role when it comes to national tax matters in the EU.