Vehicle registration tax should be abolished and replaced with a road tax geared to carbon dioxide emissions, according to the European Commission, which has been surveying methods and rates of car taxation across the EU. From Tim King, in Brussels
The proposal is likely to be strongly opposed by the Minister for Finance, Mr McCreevy, whose Department raises sizeable revenue from levying a vehicle registration tax. A document declaring the Commission's intent to propose an EU-wide law on the subject was supposed to be published on Friday, as a parting shot from the Commission before the summer break.
But it has been delayed to the autumn, after a revolt by the British Commissioners, Mr Neil Kinnock and Mr Chris Patten. In 1995, the Irish Government collected €366.7 million in VRT. The VRT receipts increased to €1.001 billion by 2000. In 2001 the figure was €542.8 million."We would like to be able to move to annual road taxes linked to carbon dioxide emissions," a Commission official said.
Ironically, the UK is the only one of the EU states which would be unaffected by the proposal since it has an annual road tax and no vehicle registration tax.
So effectively the Commission is proposing that 14 EU states should switch to a UK model of car taxation. But this was not enough to satisfy the British commissioners, who were both unhappy with a declaration last week from the Commission that rates of excise duty on diesel for commercial vehicles should be harmonised across the EU.
The UK treasury is opposed to the harmonisation of even indirect taxes. Mr Kinnock and Mr Patten retaliated by blocking publication of the document on car tax, which will be referred for further discussion at a meeting of the Commission, probably in September.
The Commission believes that vehicle registration taxes, payable when a new car is first put into circulation, are an obstacle to a single market in cars across the EU.
The disparate rates of taxation are blamed for variations in the price of new cars between EU states.