IP/04/970

Brussels, 20^th July 2004

Passenger car taxation: public consultation on proposals for Community legislation

The European Commission has launched an online consultation for views from the public and business on reforming EU passenger car taxation systems so as to remove tax obstacles which distort the functioning of the Internal Market. The consultation, which runs until 10 September 2004, is based on a questionnaire which seeks information on the tax problems encountered when passenger cars are moved from one Member State to another and views on four possible options for resolving those problems. The consultation follows the Commission's Communication on passenger car taxation of September 2002 (see IP/02/1274) in which the Commission recommended in particular the gradual phasing out of registration taxes and the introduction of a new tax structure linked to CO2 emissions. The opinions expressed during the present public consultation will be taken into account in a proposal on this subject that the Commission is due to present at the end of this year. More information, including the questionnaire and a document describing the issues in more detail, is available on the Europa website at: http://ec.europa.eu/taxation_customs/taxation/consultations/car_taxation_en.htm

"It is not acceptable that individual EU citizens and car manufacturers have to face tax obstacles such as double taxation when they move cars from one country to another within the Internal Market", commented Taxation Commissioner Frits Bolkestein. "We want to obtain people’s views before making a proposal that would be designed both to address these cross-border car tax problems and to ensure that car taxes are more clearly geared to meeting the Community's environmental objectives."

Consultation documents

As a basis for the consultation, the Commission has produced a questionnaire that analyses the current tax obstacles such as double taxation, distortions and inefficiencies that are caused by the existence of twenty five different tax systems for passenger cars within the EU and presents four options for the resolution of these problems. These are:

• do nothing, which would mean that EU Member States would continue to have highly diversified car tax systems and that individuals encountering problems such as double taxation as a result of the interaction of these different systems might have to take their case as far as the European Court of Justice in order to remedy this
• retain existing taxation systems but introduce a system of refund of registration tax so that at least double taxation is prevented when a car is transferred from one Member State to another
• phase out registration tax gradually, since registration tax is the main obstacle to the free movement and transfer of passenger cars within the Internal Market, with the application of a registration tax refund system in the meantime, and introduce a new tax structure linked to CO2 emissions or
• reduce registration tax to a level that does not exceed 10% of the pre-tax price of the car which would at least tackle the excessive and disproportionate payment of registration tax.

The motor industry and consumer associations which have already been consulted for views support the third option. Their reactions are described in the more descriptive document – the "Extended Impact Assessment" - associated with the questionnaire.

For background information see:

http://ec.europa.eu/taxation_customs/taxation/vehicles_taxation/index.htm