WRITTEN QUESTION E-0624/02

by Stavros Xarchakos (PPE-DE) to the Commission

(5 March 2002)

Subject: Reduction of car prices

The Commission recently presented its proposal on opening the market in cars. In order to achieve the greatest possible consensus, it also stated its intention officially to consult Parliament (and the organisations concerned) even though there is no formal requirement to do so at the present stage of drawing up the draft regulation. The ultimate goal is to bring down car prices, encourage competition and benefit consumers.

However, while the Commission is making such an effort, there are countries such as Greece and Denmark where car prices remain exceptionally high owing to the special sales tax which is particularly high on vehicles of over 1800 c.c. Moreover, diesel engines, which are particularly economical (their emissions are also less harmful than those of petrol engines) are banned in Greek cities, which restricts Greek consumers to the 1000-1600 c.c. bracket. The purchasing power of Greeks is much less than that of the average consumer in the other Member States, which means that a much higher percentage of pay is needed to acquire a car of one's own in Greece. Finally, the tax system uses the cubic capacity of the engine rather than its power as its reference point and, therefore, cars using obsolete technology are taxed at the same rate as hi-tech vehicles.

Is the Commission aware of this situation? Why does Greece appear to have the highest rate of car tax in the EU? When will this situation change? Is this excessive taxation consistent with the harmonisation required of a single internal market?

Answer given by Mr Bolkestein on behalf of the Commission

(23 May 2002)

As the Honourable Member is aware, the Commission has indeed adopted a draft Commission Regulation on the application of Article 81(3) of the EC Treaty to categories of vertical agreements and concerted practices in the motor vehicle industry(1). The Member of the Commission responsible for Competition presented the proposal at the Parliament's Plenary session on 5 February 2002 and at the Parliament's Economic and Monetary Affairs Committee (EMAC) on 19 February 2002.

The objective of the proposal is to strengthen competition in that sector and is based on the assumption that increased competition will lead to more effective price competition. It does not aim at the harmonisation of either final consumer prices or pre-tax prices, but to the effective exercise by consumers of their right to take full advantage of the Single Market.

Concerning vehicle taxation the Honourable Member is aware that there is little Community legislation(2), or harmonisation in the area of vehicle taxation. Therefore, each Member State applies its national legislation, which has to be in line with the general principles of the EC Treaty and in particular not to give rise to border-crossing formalities in trade between Member States and respect the non discrimination principle (Article 90 of the EC Treaty).

As a consequence, both vehicle tax bases and taxation levels, governed by national law, are very diversified. Greece is currently applying a Registration tax, known as special vehicle consumption tax, which is among the highest in the ten Member States of the Community applying such a tax.

The Commission is aware of these registration tax divergences and the problems they pose to free movement of passenger cars within the internal market. The Commission is also considering options for future action in the area of vehicle taxation and it intends to present a Communication on this issue during the coming months, in order to launch a discussion, with Member States and other Community Institutions. The Communication will address specific fiscal and environmental aspects of vehicle taxation, including those relating to registration tax.

The Commission would also like to inform the Honourable Member that the Commission's efforts envisaging an approximation of vehicle taxation levels has proven very difficult to achieve in practice due to the unanimity rule required for decisions on fiscal matters.

(1) Published in OJ C 67, 16.3.2002 with an invitation to submit comments not later than one month after the date of the publication.

(2) Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another, and 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals, OJ L 105, 23.4.1983.