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Global Fleet News European Commission Suggests Common Car Tax for EU Nations

August 3, 2004

The European Commission has asked the vehicle leasing and management sectors whether it would like the existing patchwork of national passenger car taxation laws to be reformed and replaced with a more harmonized system, according to Fleet News, a UK-based fleet management publication. According to Fleet News, the European Commission in Brussels is particularly keen to discover in wide consultation whether there would be support for replacing registration taxes with charges based on CO2 emissions, which would help the European Union (EU) meet its Kyoto Protocol global warming commitments. Comments on the following four options have been requested by September 10:

1. Doing nothing
2. Retaining existing systems, but introducing refunds to avoid double taxation when cars transfer to a different EU member country.
3. Gradually phasing out registration tax, with a refund system to apply in the meantime, before a new tax linked to CO2 emissions is introduced.
4. A hybrid system of CO2 taxes, alongside a lower registration tax, reduced to levels not exceeding 10 percent of pre-tax prices.

Fleet News added that the European Commission said it wanted reform, because of the complex legal problems created by contrasting registration tax rules, which its research has identified as 'the biggest problem' in the (pre-expansion) 15 member states regarding transferring cars across borders. The commission would prefer these are 'replaced by annual road taxes and fuel taxes related to the use of a car rather than its acquisition'.

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