SMMT supports plans for harmonised European car taxation

28 July 2004 #SMMT News

SMMT supports plans for harmonised European car taxation

Plans to harmonise car sales tax across Europe would be welcomed by the SMMT. A discussion document, issued by the EU Commission this week, confirms that the many disparate tax regimes continue to distort the market, contributing to new car price differentials across Europe. By creating a level playing field, the Commission believes these would start to disappear, leading to a clearer single market for consumers.

At present the combination of sales taxes and registration fees vary from between 15 and 198 per cent depending on the country in which a new car is registered.

SMMT chief executive Christopher Macgowan commented, ‘The two biggest factors contributing to price differences across Europe are currency fluctuations and sales tax variations. So moves to bring sales taxes into line across Europe will be welcomed by car buyers as well as the automotive industry.’

Following the UK’s lead, the Commission also believes that environmental targets can be achieved by linking vehicle taxes more closely to CO2 emissions. This includes company car tax.

However, proposals to increase diesel duty to match the levels set on petrol, could have a negative impact on demand for more CO2 efficient models on the European mainland. At the moment diesel penetration throughout the EU is still much higher than in the UK.

Other measures proposed in the paper, supported by SMMT, include the abolition of registration taxes. In the UK the new car first registration fee was raised 52 per cent in January 2004 from £25 to £38, potentially generating an extra £33m for the Chancellor in 2004.


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