sou · GSB363 · 2005-01-01 00:00:00 — As a first stage, the tax on diesel shall be raised by (0.055)1 per litre, a carbon dioxide-related vehicle tax for light motor vehicles, and also an environmentally-led vehicle tax reorganisation for heavy motor vehicles. In addition to these material proposals, the commission is also submitting proposals for a modern and simplified statutory regulation of road traffic taxation, partly in the form of a new road traffic taxation act. The above mentioned proposals have been submitted with the objective that they can be dealt with and will lead to immediate legislation. In addition, we have investigated the following areas that will constitute the basis for continued work in the Swedish Parliament and in the ministries. 1 Exchange rate 1st October 2003: = (OJ C 236,2.10.2003, p. Some considerations about the taxation of diesel for work , and the principle elements concerning the formulation of a Swedish kilometre tax system for heavy goods vehicles. As detailed above, the commissions work extends over a large area. The points given above consequently only encompass the more prominent parts of the commissions work. In addition the commission is submitting proposals relating to a number of minor issues, as well as giving certain judgements that are relevant to the continued work within the area of road traffic taxation and other closely related areas. The commissions proposals in greater detail The motor fuel taxes The Swedish basic framework In the report Taxation, environment, and employment the Swedish , outlines the basic framework for a stable and easily understandable system of energy taxation, with an increased relationship to the environment (SOU 1997:11). , all fuels that are used for running engines should be subject to a carbon dioxide tax, an energy tax related to the energy content of the fuel, a sulphur tax, and a traffic and environmental tax, which is allowed to vary between fuels to accommodate concerns about particular environmental impacts and other external costs. A reformed motor fuel taxation We propose that the tax on petrol and diesel is placed on an equal footing in the long term according to objective criteria. This will be accomplished through an increase in the diesel tax, which will be a consequence partly of our allowing the tax on petrol to form a reference level after the reorganisation, and partly due to the fact that diesel is currently subject to a considerably lower tax than petrol. A uniform taxation would, at current tax levels (2004-01- 01), mean that the tax on diesel for transport purposes would be increased by (0.24) per litre. As a first stage towards a uniform taxation we propose however that the tax on diesel shall be raised by (0.055) per litre. The proposal for a new motor fuel taxation model primarily aims at the dominant fossil fuels, petrol and diesel. It is proposed that the motor fuel tax on these fuels is levied according to the following model. A fiscal component, the energy tax, a carbon dioxide tax component, and an environmental class component. The model follows the Swedish basis framework according to which petrol and diesel should be taxed according to the same principles. This is also one of the three major principal changes that the Swedish recommends. A reorganisation of motor fuel taxation of this kind means that the tax will be levied in accordance with the fuels own merits and on a technology-neutral basis. The energy tax will thus be levied on the basis of the fuels energy content. The carbon dioxide tax shall, as today, be deducted in accordance with the fuels carbon content. In addition we propose that an environmental class component is introduced into the model with the aim of taking over the current function of the energy tax to differentiate between environmental within petrol and diesel. We have thereby, as the directives prescribe in particular, examined the suitability of isolating out a so-called traffic- and environmental tax component from the energy tax. We have found that a component such as this is not optimal in internalising (capturing) the negative external environmental effects that traffic gives rise to (e.g. costs relating to noise, crowding and accidents). We have however come to the conclusion that the component has a pedagogical function and can be used within motor fuel taxation to distinguish between different types of fuel and fuel qualities. In addition the component clarifies how the energy tax directive (directive 2003/96/EG) can be applied in national legislation. Finally, the component constitutes a precondition, along with retained environmental class management, in enabling a reorganisa- tion of the energy tax so that it relates to the fuels energy content. As the components function is to differentiate between environ- mental within the respective fuel type, we propose that it should be called the environmental class component. The alternative motor fuels With regard to the carbon dioxide-neutral fuels that are important in pursuing a long-term climate policy, our proposals concerning a uniform taxation mean that, as the diesel will become considerably more expensive, the competitiveness of alternative fuels is reinforced. If, in addition, in the long run petrol and diesel are taxed according to the same principles, and a tax that is completely technology-neutral is implemented, the competitiveness of diesel alternatives is further reinforced. With respect to the current taxation of the carbon dioxide neutral fuels, the commission sees no reason to intervene in, or otherwise propose changes in, the governments ongoing implementation of a taxation strategy for these motor fuels as it was expressed in the budget proposals for 2002 and 2004 and other places. However, it should be emphasised that the commissions proposals do not in any way close the door on these fuels. It is rather that they can be, in a simple and technology-neutral fashion, incorporated into motor fuel taxation in line with the Swedish basic framework, when it is judged to be appropriate. In addition to the carbon dioxide neutral motor fuels there are other alternative motor fuels such as natural gas and liquefied gas (LPG). In this context the commission has come to the judgement that it is still too early to apply the Swedish principles to these fuels, as in these cases there is an imminent risk of being immediately forced to renounce the principles that, after all, should be guiding the new motor fuel taxation. As indicated above, we are proposing that the tax on diesel as a first stage is increased by (0.055) per litre. The intention is that further stages should follow in order to be able to fully implement a uniform motor fuel taxation over a few years. The proposal for a staged increase of the motor fuel tax on diesel is in line with the green tax programme that the government previously decided upon, according to which billion (3.3 bn) will be transferred to green taxes between 2001 and 2010. Irrespective of whether some of the tax revenues of the proposed tax increases are used to compensate various sectors, the commissions proposals will nevertheless lead to the possibility of large annual amounts being included in the ongoing green tax reform. The taxation of diesel for work As mentioned, we have previously reported our ideas relating to the taxation of diesel for work in a memorandum. In the memorandum, the commission found it appropriate to make use of the so-called heating level as a lower taxation level for work , under the condition that the legislator considers that the need for a lower level is present. The memorandums proposals have not led to legislation. In connection with the commissions final report of this matter, the legal, budgetary and practical consequences of allowing work within certain sectors to be instead taxed according to the so-called industrial level, are now also dealt with. The continued handling of this issue is entirely dependent on political positions. Further considerations should include partly which sectors will enjoy any lower diesel tax levels, partly the level at which the lower diesel tax will be set. Against this background the aim of the commissions handling of this issue is thus to submit basic documentation for the continued political discussion that is required to enable decision-making in more detail on the forms for any lower diesel tax level for certain sectors. Since the memorandum was submitted, new exhaust requirements for work have been decided at EU-level, that stipulate, among other things, that environmental class 1 diesel is used. An environmentally-led vehicle tax reorganisation for light motor vehicles – carbon dioxide related vehicle tax The reformed vehicle tax model With the aim of increasing the environmental management for light motor vehicles (private cars, goods vehicles and busses with a maximum total weight of 3.5 ), we propose a gentle reorganisation of the vehicle tax onto the basis of carbon dioxide- emissions instead of weight. This will apply to petrol and diesel driven vehicles and also to those vehicles that can be driven with alternative motor fuels. It is thus proposed that the vehicle tax is differentiated according to each vehicles specific emissions of carbon dioxide per kilometre driven. We propose that the following three components should be included in the new vehicle tax model. A fiscal component, a carbon dioxide tax component, and an environmental and fuel factor for vehicles that can be driven with diesel. The fiscal component is levied at (40) per vehicle. The carbon dioxide tax component is levied at (1.3) per gram of emissions of carbon dioxide per kilometre, in excess of 100 grams. The environmental and fuel factor should be applied to vehicles that can be driven using diesel. This is intended as compensation partly for the fact that diesel vehicles generally have higher emissions of nitrogen oxides and particulates, partly that they enjoy less stringent exhaust requirements than petrol driven vehicles, partly also that diesel is taxed less than petrol. The factor is applied by multiplying the sum total of the fiscal component and the carbon dioxide tax component by 3.5. The objective behind our proposal to base the vehicle tax on the vehicles carbon dioxide emissions instead of weight is thus to increase environmental management in the vehicle tax, at the same time as retaining the tax revenues. We consider that the way in which the proposal is formulated is a proper response to the demand for long-term stability, at the same time as it rewards fuel- efficient vehicles through its function. The latter is deemed to be of increasing significance concurrent with the fact that the climate policy objectives must be met. The proposals formulation also results in a broadening of the base for a continued green tax reform, which, against the background of the green tax reform previously established by the government, has to be seen as valuable. Which vehicles are to be included? – treatment of older vehicles The new vehicle tax will apply to vehicles of model year 2006 or later. In addition it will apply to those older vehicles that fulfil at least environmental class 2005, environmental class El or environmental class Hybrid. Those older vehicles that do not comply with any of the above mentioned criteria will in the main be taxed according to current rules. We propose, however, that some additional environmental management is introduced in the taxation of petrol driven vehicles of model year 1988 or earlier through subjecting them to taxation that is 30 percent higher than today. For diesel driven vehicles, a vehicle tax that amounts to 90 percent of todays tax will apply to vehicles of model years 1989–2005. The aim behind this reduction is to, to some extent compensate the owners of these vehicles for the increased diesel tax. Vehicles older than model year 1989 will retain todays tax. As a result of the diesel tax increases, it will therefore be more expensive to drive older diesel vehicles and it will be more expensive to own an older diesel vehicle than a newer one. The commission has chosen 1989 as the cut-off point for the oldest vehicles, as that was when the exhaust requirements for new petrol driven private cars were introduced which made the fitting of catalytic converters and equipment that reduced evaporation of fuel compulsory. 1989 was also the year when exhaust requirements were introduced for diesel driven private cars. Concerning light busses and light goods vehicles in particular Busses and with a total weight of max. 3.5 have today a significantly lower vehicle tax than private cars. This relationship is unsatisfactory. All these vehicles should be taxed uniformly under the new carbon dioxide related vehicle tax model as proposed above. The tax on light busses and light goods vehicles shall therefore in the long-run be increased to the level of private cars. As the road traffic register does not yet contain details of these vehicles emissions of carbon dioxide they must, however, during a transition period (up to the ) be taxed according to the weight related vehicle tax scale. Until then it is proposed that the vehicle tax for light busses and light goods vehicles is increased as a first stage by means of a percentage increment of 40 percent. The increase in the tax levy for light busses and light goods vehicles is motivated by administrative reasons, as well as for reasons of fairness. In addition there are also environmental reasons for adjusting the tax level so that the tax levy for small busses and light goods vehicles is at least not lower than that for It can be assumed that an equivalent taxation will stop the re-registering of private cars to light goods vehicles for purely tax related reasons. An environmentally-led vehicle tax reorganisation for heavy motor vehicles With the aim partly of improving the competitive situation of the haulage industry, partly of increasing environmental management for heavy motor vehicles, we propose a special vehicle tax scale that is differentiated in accordance with the existing environmental (EURO)-. Most heavy vehicles that fulfil stricter environmental demands are taxed at a rate that is in principle reduced to the EU's minimum levels. The differentiation is implemented in such a way that heavy vehicles (over 3.5 ) that at least fulfil the most recent compulsory exhaust requirement that applies to new vehicles, are taxed at a lower rate than heavy vehicles that comply with a lower environmental class. In the first stage the higher environmental requirements are the equivalent of environmental class 2000 (or later). In order to receive a lower vehicle tax in the second stage requires environmental class 2005 (or later) and during the third stage environmental class 2008 (or later). By means of this structure, long-term control is built in that encourages the use of cleaner vehicles. The proposal also makes it more profitable to choose a vehicle with a higher environmental class than is compulsory as the tax discount is then enjoyed for several years. It is also adjudged to increase the use of environmentally friendly vehicles due to the fact that there is a strengthening of the incentive to use clean vehicles that are already available, and to bring forward the purchase of new vehicles with a better environmental class. The significance of the vehicle tax for the haulage industrys international competitiveness is certainly not that great. The proposal is nevertheless considered to facilitate competition by harmonising the Swedish vehicle tax for heavy vehicles that satisfy stricter environmental demands up to, in principle, the EU's minimum levels. For the cleaner vehicles, the proposed environmentally-led vehicle tax also mitigates the effects of the (0.055) per litre increase in diesel tax. The proposal also simplifies the tax scales by suggesting wider weight intervals, in line with the EU's minimum tax rates. This too means that many vehicles will be taxed at a reduced rate compared with today. The reduced vehicle tax for heavy vehicles is financed within the framework of the commissions other proposals on, among other things, increased diesel tax and increased vehicle tax for light busses and light goods vehicles. Heavy vehicles with pneumatic suspension The minimum tax rates for levying of vehicle tax for heavy goods vehicles that have been decided (directive 1999/62/EG) are differentiated through considerably lower tax for vehicles that have drive shafts with pneumatic suspension or other equivalent suspension, than for other vehicles. In some European countries the presence of pneumatic suspension is taken into account in vehicle taxation, in others it isnt. In general it can be stated that pneumatic suspension is positive in terms of wear. However, there is some uncertainty regarding the connection between pneumatic suspension and road wear. Differentiation of the vehicle tax scale for heavy goods vehicles in terms of the presence of pneumatic suspension would require more detailed knowledge of the significance of pneumatic suspension for reduced road wear. Against this background no tax differentiation is proposed with regard to this sort of suspension. The commission has examined advantages and disadvantages of a possible kilometre tax in . During this task the commission has, among other things, studied the experiences that other European countries have had in conjunction with equivalent debates, and has received assistance with analyses of various kinds from several government authorities (the , and the ). The commissions conclusion is that, if the necessary conditions are met, should take further steps in developing a kilometre tax in . The systems formulation and an envisaged time schedule for its introduction It is proposed that a kilometre tax – with certain exceptions – is levied for heavy goods vehicles, i.e. with a total weight of over 3.5 , and that it covers the entire public road network (some private roads, such as motor roads and similar will be excluded). To guarantee the functioning of the system we propose that a comparatively simple system is introduced to start with and that this is subsequently expanded. The proposal should therefore be considered from two perspectives: the short and the long term. In the short term the commission is of the opinion that the earliest date that the basis of a kilometre tax system can be introduced is from the start of 2008. By way of introduction, the tax should be differentiated solely on the basis of the vehicles properties (the vehicle combinations total weight and environ- mental [EURO] class). The introduction should be seen as a stage towards a more effective transport policy with consideration taken to the road hauliers cost responsibilities and need for road traffic taxation that is competition-neutral. In the slightly longer term, possibly from 2010, or as quickly as the system is deemed to be sufficiently stable, from the perspective of transport policy there is proper motivation to differentiate the kilometre tax between built-up areas/countryside, as there are very large differences in external marginal costs between the two. The possibilities of further increasing the complexity of the system should be subsequently examined. If additional adjustments can be implemented at low extra costs for the system, this is desirable from the points of view of transport and environmental policy. The technical solution proposed is focused on certain functions and not on certain specific technical methods, but should allow for an increased complexity with respect to the differentiation of the tax. The commission considers that it is of considerable importance that if possible, the introduction of a kilometre tax is speeded up. In this context an important signal might be a clarification of intention through a decision from the Swedish Parliament. the kilometre tax is introduced, the current road charge (the Eurovignette charge) will be abolished. In conjunction with this, issues of compensation under the new state of affairs would also need to be discussed. Some consequences of a kilometre tax The introduction of a kilometre tax will result in greater competition neutrality between Swedish registered and foreign registered vehicles with respect to road taxation. In addition, a differentiation of the kilometre tax according to the vehicles respective environmental (EURO) class will involve a more accurate internalisation of the external costs than is the case today. In as much as the costs of road haulage will become higher than they are today, it is estimated that the kilometre tax will also stimulate other transport solutions, such as a greater use of rail and for example. A kilometre tax does however entail higher administrative costs, in terms of levying the tax as well as for monitoring and control, than applies to the current road charge. New Road Traffic Taxation Act etc. The commission proposes that the rules for vehicle tax and car-for- sale tax are combined into a joint Road Traffic Taxation Act for these kinds of taxes. The act is constructed in accordance with a modern structure with the aim of making the statute more accessible both for the individual and for the authorities, who have to apply it. In addition to the purely technical review of the statute, we also propose improvements and modernisation of the procedure for levying the road traffic tax. As a contribution to this, we have tried to adapt the procedural rules principally in accordance with that which applies for other kinds of taxes. Further, we address the issue of inserting the road traffic taxes into the tax account system as well as the issue of whether a special road traffic tax account should be introduced. The commissions overall assessment of these forms of account is that the conditions for proposing a system such as this are not yet present. when a kilometre tax system is introduced the need for and advantages of a road traffic tax account will be greater than is the case with the current road traffic taxes. Concerning the car-for-sale tax in particular A car-for-sale license allows vehicles to be used that are deregistered or that are not in the road traffic register. This is of considerable significance for car dealers for example. Possession of a car-for-sale license is subject to tax (car-for-sale tax). The commission has considered whether to discontinue the car- for-sale tax but found that there are reasons that argue for its retention. For example, it is currently the only functioning routine that acts as a basis for revoking car-for-sale licenses that are not used. However, some changes to the tax are proposed. Tax liability for light trailers, special purpose vehicles and tractors is discontinued. The tax rate for other vehicles liable for the car-for- sale tax is doubled in principle. Regulations pertaining to the car- for-sale tax are placed into the new Road Traffic Taxation Act. Other issues related to the legal review The commission would like to emphasize that there are grounds to undertake a more thorough review of the taxation of tractors and of so-called veteran vehicles than that which the commission has had the opportunity to carry out within the framework of the task that has now been completed. Some additional road traffic tax issues In addition to the proposals indicated above, that to a greater or lesser degree it was incumbent on us to investigate in accordance with the directive, during our work we have come into contact with other issues that are relevant within the area. As these are not within the remit of our directive, we are not submitting any concrete proposals here.