Almost all West-European countries now levy some form of CO2 tax on passenger cars. A survey done by ACEA, the European Automobile Manufacturers’ Association, shows that over the past 15 months, France, Spain, Finland and Ireland introduced CO2-related car taxation, bringing the total of EU Member States with such a system up to fourteen.
In addition, countries such as the Netherlands, Denmark and Portugal implemented significant changes to their existing schemes.
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But they differ widely across the EU. Italy, for example, offers a one-off incentive when purchasing a new car. France and the UK use CO2 emissions systematically for taxing privately owned and company cars. Similarly, France, the UK and Luxembourg use CO2 emissions as the only factor for car taxation, whereas others apply a combination of criteria including car price, engine capacity and CO2 emissions. Some countries impose rather arbitrary cut-off points to increase tax rates stepwise.
The car industry advocates a linear system, in which tax levels are directly proportionate to the car's CO2 emissions and every gramme of CO2 is taxed the same. Car tax schemes should neither include nor exclude specific technologies and be budget neutral in end-effect.
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