Commission staff working document - Annex to the : Proposal for a Council Directive on passenger car related taxes - Impact Assessment {COM(2005) 261 final}
Date: 2005-07-05
Institutions: European Commission
Subjects: consumer protection, impact study, motor car, pollution control measures, public awareness campaign, tax harmonisation, vehicle tax













EUR-Lex - 52005SC0809 - EN






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52005SC0809

Commission staff working document - Annex to the : Proposal for a Council Directive on passenger car related taxes - Impact Assessment {COM(2005) 261 final}  /* SEC/2005/0809 final */  








[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 5.7.2005SEC(2005) 809COMMISSION STAFF WORKING DOCUMENTAnnex to the : Proposal for a Council Directive on passenger car related taxes. Impact Assessment {COM(2005) 261 final}TABLE OF CONTENTSA. What issue/problem is the Proposal expected to tackle? 3B. What is the main objective of the Proposal that is expected to be reached? 6C. What are the main policy options available to reach the objectives? 7D. What are the impacts - positive and negative - expected from the different options identified? 11E. How to Monitor and evaluate the results and impacts of the proposal after implementation 24F. Carrying out stakeholder consultation 26G. Commission draft proposal and justification 33A. WHAT ISSUE/PROBLEM IS THE PROPOSAL EXPECTED TO TACKLE?1. What is the issue/problem in the area of passenger cars expressed in economic, social and environmental terms including unsustainable trends?This part in the Impact Assessment concerns the identification and analysis of the main problems within the European Union in the area of passenger cars, expressed in economic, social and environmental terms.Two main strands are considered in this analysis: the functioning of the Internal Market and sustainability.From the point of view of the functioning of the Internal Market , the operation of 25 different tax systems for passenger cars within the EU has resulted in tax obstacles such as double taxation, tax-induced cross-border transfer of cars, distortions and inefficiencies, which impede the proper functioning of the Internal Market.European citizens currently face double payment of Registration Tax (RT), considerable administrative procedures and extra costs, time losses and various obstacles to the free movement of their passenger cars within the Community.For the industry , wide differences in passenger tax systems have a negative impact on their ability to achieve the expected benefits of operating within a single market. Current passenger car market fragmentation prevents industry from exploiting economies of scale, or in producing passenger cars with similar specifications for the entire Internal Market, resulting in significant differences in pre-tax and consumer tax-prices.As far as sustainability is concerned, passenger cars are a major source of CO2 emissions and are, therefore, of particular relevance to the EU's environmental objective, namely to meet its environmental commitments under the Kyoto Protocol.Fiscal measures constitute one of the three pillars of the Community strategy to reduce CO2 emissions from passenger cars. Their optimal use, together with the commitments given by the car industry (ACEA, JAMA and KAMA) and consumer information, is a critical instrument in achieving the Community's target of 120 g CO2 per Km. Moreover, the reduction in CO2 emissions goes hand in hand with savings in the specific energy consumption of cars. It, therefore, also has positive implications for the efficient use of energy products, so contributing to the sustainability of energy supplies.It should be mentioned that the two target areas mentioned above are not entirely linked to each other and thus, measures aimed to improve the functioning of the internal market could be taken without addressing the CO2 issue and vice versa. However, it makes sense to address both in one single proposal, without prejudice that in this assessment the two issues will be addressed separately.2. What are the risks inherent in the initial situation?If no action is taken the functioning of the Internal Market in the area of passenger cars will not improve. European citizens will continue to pay diverse RT in sixteen out of the twenty five EU Member States Double payment of RT will continue to take place when a citizen permanently moves a car registered in a Member State to another also applying a RT. The industry will continue to see fragmentation of its car markets, resulting in loss of opportunities in exploiting economies of scale, improved competitiveness and so on.In relation to sustainability , policy neglect in this area will impact on the EU's environmental objectives and is likely to result in the Community's target of 120g CO2 per Km not being achieved.3. What are the underlying motive forces?The passenger car market is still a long way from a true single market and, therefore, any movement towards an approximation of the taxation system will give a strong signal from an Internal Market point of view. The existing situation does not satisfy anybody as it involves heavy costs for the citizens, the car industry and trade, and also for the national administrations themselves in terms of the high administrative cost in managing their tax systems.Although European Court of Justice case law has helped in resolving specific problems that the European citizens face, it cannot ensure legal certainty nor can it provide answers to a large number of questions relating to free movement of passenger cars. It is evident, therefore, that legislative action is necessary.As far as sustainable development is concerned, transport is responsible for about 28% of total CO2 emissions. Road transport alone currently represents 84% of all transport related CO2 emissions of which more than half is accounted for by passenger cars[1]. Despite the commitments made by the car industry, CO2 emissions from passenger cars will rise even further, particularly due to increased transport demand, if no effective use of fiscal measures is made. The use of these measures, and particularly of their function as a guiding force, is critical in order to influence consumer's behaviour towards more fuel-efficient passenger cars and thus reinforce sustainable development at Community level.4. What would happen under a "no policy change" scenario?If no action is taken the proper functioning of the Internal Market in the area of passenger cars cannot improve. Continuation of legal uncertainty and lack of transparency will keep transitional costs for passenger cars high. Disproportionate RT levels, including cases of double payment of RT, will keep car retail prices high, pre-tax price differentials will continue and, for low income citizens, the replacement of their cars will be more difficult. Due to lack of Community legislation, the Jurisprudence of the Court of Justice will remain the only refuge for resolving citizens' problems, mainly on the basis of the general principles of the EC Treaty.As to sustainability , the Community's target of 120 g CO2 per Km will run the risk of not being achieved by 2010. Based on model projections on road transport, CO2 emissions would increase during the period 1995 to 2010 by +17%. If the Community's target of 120 g CO2 per Km is implemented this increase will be limited to only +3%. The genuine use of fiscal measures to meet these targets is fundamental to the Community strategy. Fiscal measures provide a strong incentive value, for example, by encouraging the rapid renewal of the car fleet. Failure to use them will mean that there is little incentive for change.5. Who is affected?It is a fundamental freedom of the single market that European citizens should be able to move between Member States without encountering any obstacles such as double taxation. Since completion of the single market in 1993, citizens have reasonable expectations that problems associated with movement - either temporary or permanent - between Member States should have disappeared. The citizen does not understand why he is often asked to pay a RT twice, or why he is not allowed to contest excessive residual values for used cars, established arbitrarily by some Member States of destination, in order to collect high and disproportionate amounts of RT. Last but not the least, the citizen wants a RT refund system, to be applied in all cases where a car is transferred permanently to another Member State or exported. The abolition of RT will reduce the administrative procedures in cross-border transfers of cars and, therefore, the citizen will find it easier to buy his new car in the market of his choice. Finally, car owners will be affected insofar as they will pay more tax to keep on the road a less fuel efficient car, and gain if they own or buy a more efficient one.The motor industry favours an approximation or simplification of fiscal provisions in the area of passenger cars in order to enjoy the potential benefits of operating within a single market, and consequently to improve competitiveness and create new jobs. The car industry is interested in producing cars for the entire Internal Market using the same technical specifications, and so benefit from economies of scale. In the area of used cars the benefits for the car trade are expected to be particularly positive. The proposal aims to introduce Community rules for the establishment of a RT refund system and the application of a transparent method for calculating the residual value of used passenger cars. These measures will tackle the problems of disproportionate amounts for RT in cross-border transfers of passenger cars, and have a positive impact for the car trade.The cross-border passenger car trade is currently influenced by car pre-tax price differentials and market fragmentation. The proposed gradual abolition of RT is expected to abolish about 20% of these car price differentials. These differentials should be further reduced following the application of the new Regulation on "Block exemption".Member States applying RT are concerned at seeing the administrative cost of managing their car taxation systems rise, due to the expected increases of parallel imports of passenger cars particularly after the entry into force of the new Regulation on block exemptions. This could happen as citizens will be allowed to buy their car anywhere in the Community without any restriction (exclusive representative). Member States will also need to better organise their taxation systems and take any appropriate measure in order to ensure the correct payment of, or discourage the avoidance of paying, the higher Annual Circulation Tax (ACT). Although the global tax revenue is expected to remain stable more administrative effort is needed in order to restructure the tax base of car related taxes and insert a CO2 element into each of them. To keep car tax revenue stable closer monitoring and rapid adaptation to the new situation is needed particularly in order to adapt the levels of diversified taxes following the reaction of the consumer to the fiscal measures in force.The European Regions are also concerned in certain Member States where car taxes have been regionalised . Certainly, the proposed Directive does not affect the tax levels to be applied, or the use to be given to the tax revenue collected, but only the structure of the car tax base. It is therefore expected that certain Regions will have to gradually abolish or to substantially reduce the level of Registration Tax and replace the relevant revenue loss by the increased revenue from ACT. They will need to take action to restructure the tax bases and monitor the application of the new system. These changes can be taken during the transitional period in a manner that better corresponds to their particular conditions.B. What is the main objective of the Proposal that is expected to be reached?1) What is the overall policy objective in terms of expected impacts?The overall objective of this proposal is to improve the functioning of the Internal Market and contribute to the Community's strategy to reduce CO2 emissions from passenger cars.With regard to the Internal Market, the particular objectives of the proposal are the following:-  Reduce the differences of the European pre-tax car prices due to the level of taxes( mainly to RT)-  Cut down the car market fragmentation resulting from the wide differences in tax systems-  Eliminate the problems of double taxation on cross border transfers of cars-  Reduce transaction costs for the consumer when a car is permanently moved from a Member State to another-  Give the citizen more transparency and legal certainty in the rules applicable to determine the value of a second-hand car during the transitional period until registration taxes disappearWith regard to the Community' strategy to reduce CO2 emissions from passenger cars and promote sustainability, the proposal only focuses on CO2 emissions from passenger cars. However, Member States can use fiscal incentives for also reducing other polluting emissions which are regulated for type-approval, such as NOx and particulate matters. When revising their national passenger car taxation systems Member States could consider whether additional environmental improvements can be achieved by increasing proportionately the tax rate as a function of car age, as newer cars have major environmental (and safety) benefits compared to older cars. Although passenger car related taxes are not so high in some Member States their consumer guiding capacity is strong and can influence consumer's behaviour to replace or to re-equip old cars or to opt for less polluting new cars. This perspective includes important economic, environmental and social dimensions.2) Has account been taken of any previously established objectives ?The proposal is in line with the objectives of both fiscal and environmental policies.With regards to fiscal policy , the proposed Directive will look different than that presented in 1998[2], as it will focus on fewer, but important, issues, i.e. the abolition of RT and introduction of a RT refund system. Important elements from the Court of Justice Jurisprudence will be included in the proposal so modernising and simplifying the existing vehicle taxation systems. However, Member States will remain free to apply the level of ACT they wish, to establish the levels of RT to apply during the gradual abolition period, and to delegate the management and the revenue to Regions. A co-ordination concerning the structure of the tax base of passenger car taxes will be proposed at Community level.With regard to environmental policy, the proposal will finally put in place at Community level the use of fiscal measures, which consists the third pillar of the Community strategy, endorsed by the Council in 1996, to reduce CO2 emissions from passenger cars and improve fuel economy[3].C. WHAT ARE THE MAIN POLICY OPTIONS AVAILABLE TO REACH THE OBJECTIVES?1. What is the basic approach to reach the objective?Four main options have been considered during the preparatory phase of this draft Directive. The basic approach (option 3) taken in the draft Directive has been established in the light of the outcome of the consultation of the 2002 Communication on taxation of passenger cars, and a public consultation, and includes the following three measures:a) The total abolition of RT, over a ten year transitional period:-  a gradual, but total, abolition of RT, as this tax represents a clear obstacle to the freedom of movement of cars in the Internal Market and negatively affects competitiveness of the European car industry.-  to ensure revenue neutrality a gradual and parallel transfer of revenue from RT to ACT and, if necessary, to other fiscal measures in compliance with Council Directive 2003/96/EC, will be proposed. The latter presents a more stable source of revenue for national budgets and shall reduce progressively the administrative and management costs.-  to reduce car market fragmentation and the existing car pre-tax price differentials and approximate consumer car prices among Member States.-  to allow Member States with a high RT to better face transition costs, and apply all necessary structural changes in their tax systems.b) The immediate establishment of a RT Refund system to apply during the transitional period:-  to avoid excessive and often double payment of RT.-  to ensure legal certainty and transparency for the European citizen.-  to establish transparent and objective criteria and rules concerning the evaluation of the real residual value of used cars, and thus ensure a more equitable calculation of the residual RT for outgoing and incoming cars.-  to reduce the number of complaints by citizens by incorporating into Community law a number of elements from the abundant Jurisprudence of the European Court of Justicec) The restructuring of both RT and ACT tax bases to include a CO 2 element:-  This step is necessary in order to allow individual Member States to take concrete measures to implement the existing Community strategy to reduce CO2 emissions from passenger cars and improve fuel economy.-  To encourage the (optimal) use of fiscal measures and their widely recognised efficiency if used to promote sustainability.2. Which policy instruments have been considered?In relation to Internal Market objective, this proposal will only focus on fiscal instruments and particularly on RT, ACT and if necessary, on other fiscal measures taken in compliance with Council Directive 2003/96/EC, as they are by far the most important passenger car related taxes. The proposal should take into account the conclusions of specific studies[4] on this particular issue.With regard to sustainable development objective, solely increasing the overall level of the existing tax rates, without changing the tax base, does not provide for a significant effect. The level of RT or ACT, in absolute terms, proved also not to be very relevant for the effectiveness of vehicle taxes with regard to CO2 emissions of new cars.On the contrary, replacing the existing taxes with purely CO2 based taxes and applying sufficiently differentiated tax levels proves to provide the largest emission reductions. Adding a differentiated CO2 element to existing taxes proves also to provide a smaller but still significant CO2 reduction. Additionally, the level of potential CO2 reductions does not depend on the type of the taxes, e.g. RT or ACT, but on whether that tax is CO2 based and on the level of tax differentiation applied. However, it is essential to modify national taxes starting with either of these taxes, which are of a significant size.Tax differentiation has been proved to be the key parameter for improving the fuel efficiency of passenger cars, under certain conditions. As shown in the table under paragraph D.1.3 hereafter, the highest CO2 emissions reduction level, going up to 8,5%, has been calculated in DK, if both RT and ACT were converted to purely CO2 based taxes and would be differentiated in a co-ordinated manner.3. Which options have been discarded at an earlier stage?Three more policy options are considered and their potential effects are compared with each other before resulting in the basic approach to reach the objective mentioned under paragraph C 1) above:a. A "do nothing" approach (option 1) . This would leave all decisions to Member States and the European Court of Justice (CoJ). As shown in paragraph A 2) above, if no action is taken both the functioning of the Internal Market will not improve and the Community's target of 120g CO2 emissions per Km will run the risk of not being achieved by 2010.b . Rely on existing passenger car taxes, but only insert a RT refund system (option 2) , in order to avoid double taxation, which is not justifiable within the context of the Internal Market.The introduction of a RT Refund system would represent the minimum necessary to tackle the double taxation problem, but does not address any of the other problems the citizens, the car industry and trade face which have been mentioned under point A). Moreover, this refund system would have to be accompanied by a number of Community rules in order to establish objective and transparent methods for establishing the residual value of used cars permanently transferred to another Member State. The residual value is a critical parameter as it serves as the tax base for calculating the residual RT to be refunded or to be charged respectively concerning the outgoing and the incoming passenger cars. As already mentioned, the abundant Jurisprudence of the European Court of Justice provides a solid basis for solving certain situations but do not give legal security to citizens. In the light of the above facts this option is considered insufficient to tackle the existing Internal Market fragmentation and to promote sustainability.c. Comprehensive EU passenger car policy (option 4) A comprehensive EU passenger car taxation policy would represent an effort to reduce, but not to eliminate, tax obstacles to the functioning of the Internal Market and at the same time to promote sustainability. It would aim to:-  Reduce gradually RT to a level, which will not exceed the level of 10% of car pre-tax prices, over a period of five to ten year starting from the entry into force of the proposed Directive.-  Introduce a RT Refund System for used passenger cars and establish transparent and objective rules concerning the method of evaluating the residual value of used cars, similar to those described under option b) above.-  Restructure the tax bases of both ACT and RT in order to contain CO2elements which are directly sensitive to the CO2 emission of the passenger car, similar to that described under option C 1) above.This option is not fully consistent with the Commission's opinion that RT is the main obstacle disturbing the free movement and transfer of passenger cars within the Internal Market. However, it represents the second best option as it includes all but one element of the preferred option. The missing element is that this option instead of including the total abolition of RT provides for its gradual reduction to a low level, which has been fixed at a maximum of 10% of car pre-tax price. This option tackles a considerable number of problems, such as the excessive and disproportionate payment of RT, can better ensure revenue neutrality and has a similar impact on the Community's environmental objectives as the preferred option.However, market fragmentation, car pre-tax price differentials, high administrative costs for managing RT and high social costs for the citizens will continue to exist. Member States applying a RT will need to permanently apply a RT refund system, and to keep in place all existing enforcement and control mechanisms.4. How are subsidiarity and proportionality taken into account?In general it is considered that the proposal strikes the right balance in terms of what is considered a Commission or Community responsibility and what is left to Member States. Some European approach is required in the area of taxation of passenger cars for a number of reasons.From an Internal Market point of view the cost of keeping in place a costly, highly diversified, non transparent and de-motivating system is much higher than the transitional cost of replacing it by a more transparent, simpler, better manageable and flexible system. The new system will continue to be managed at the same level (national or regional) as the previous system, and will not affect the global revenue for the national budgets. Sufficient time is left to those Member States concerned to adapt the tax bases and apply the gradual transfer of revenue from RT to ACT and, if necessary, to other fiscal measures in compliance with Council Directive 2003/96/EC. No Community intervention is planned concerning the levels of ACT, and of fuel taxes that each Member State would consider appropriate to apply. Taxation of fuel taxes has been dealt with in 2003 with the adoption of Directive 2003/96/EC, on taxation of energy products.Concerning the environmental or the sustainability part of the proposal it is again in line with the principle of subsidiarity. It does not introduce any obligation for the Member State to apply passenger car taxes based totally on CO2 emissions but only to insert a CO2 sensitive element in these tax bases. The level of this CO2 sensitive element will be left to each Member State to establish and administer, as well as the level of tax differentiation, according to their own national fiscal and environmental objectives. In general, however, Member States have to apply this element in accordance with the general principles of the EC Treaty and apply it in a manner that does not give rise to border-crossing formalities in trade with other Member States.The proposal is also proportional to the objective. It does not envisage the harmonisation of either passenger car tax bases or tax levels. It only targets the abolition of RT which is the main remaining obstacle disturbing the functioning of the Internal market and the free movement of passenger cars. The introduction of a CO2 sensitive element serves the need to achieve the global EC objective of reducing GHG emissions and achieve the Community's commitments given under the Kyoto Protocol.D. WHAT ARE THE IMPACTS - POSITIVE AND NEGATIVE - EXPECTED FROM THE DIFFERENT OPTIONS IDENTIFIED?1) What are the (Positive/Negative) impacts of the options selected, particularly in terms of economic, social and environmental consequences?1.1. Economic impact1.1.1. Fiscal importance of passenger car taxation in the Member StatesThis chapter provides some background information for assessing the revenue impacts of the policy options described above.Table 1 in the Annex, shows the share of the car registration tax (RT) out of total tax revenues in the Member States from 1995 to 2002. The figures include the taxes and charges which are levied, under different names, on the acquisitions of new vehicles (excluding VAT). Table 2 in the Annex, displays the corresponding revenue shares of the ACT, levied annually on the ownership of cars. Table 3 in the Annex, shows the revenues in relation to total taxation accruing from transport related fuel taxes[5].The conclusions to be drawn out of these tables are the following:1. There is large amount of variation in the fiscal importance of the RT between the Member States. The RT shares exceed 1.5% of total taxation revenue in six Member States: Denmark, Greece, Malta, the Netherlands, Portugal and Finland, out of which three (DK, EL, FI) are also identified as high RT Member States in TIS Study. By contrast in nine Member States (France, Germany, Luxembourg, Sweden, Czech Republic, Slovakia, Estonia, Lithuania and the United Kingdom), the RT is not used and thus has no fiscal role. The remaining Member States use Registration Taxes, but their fiscal importance is rather small.2. The ACT shares (table 2) form a more uniform pattern across the Member States. A large majority of Member States apply an ACT, but in no case is this tax as important as RT is in the six high RT Member States shown in table 1. Three Member States apply ACT only on cars used for business purposes (France, Czech Republic, and Slovakia) whilst a further four (Estonia, Lithuania, Poland and Slovenia) use no such taxes. For the EU as a whole the fiscal importance of ACT is bigger than that of RT.3. RT has remained a stable source of tax revenues for all the MS applying RT, as the revenue shares have been relatively constant over the period considered (table 1). The ACT revenues display more variation for a number of MS, and the fiscal importance of this tax seems to have diminished somewhat for the EU as a whole.4. Fuel taxes play fiscally a much more important role than RT and ACT in all Member States, and for the EU as a whole their share of budget revenues is about four times higher that that of the RT and ACT together.1.1.2. Registration tax refund scheme: impact on national revenuesThe Commission proposes the introduction of a RT refund system to apply to all passenger cars (new or used), which have been registered in the territory of a MS and subsequently are exported outside the fiscal territory of the Community or are transferred permanently to another MS.Table 1 hereafter contains an estimation of the cost for national revenues resulting from the application of the RT refund system on passenger cars registered in a MS and moved permanently to another MS in connection with a transfer of normal residence. The tax revenue loss associated with the RT refund scheme is calculated by assuming that the RT is removed on all the cars, which are permanently moved from one MS to another, as current double taxation consists of levying a RT again on the cars, on which a RT has been already paid in the "exporting" Member State. The calculation is based on the estimated number of "imported" cars[6], total number of new cars sales[7] and the RT tax revenues[8]. Only seven RT Member States are included, because TIS Study data is not available for other Member States. It is assumed that the full RT was previously paid on "imported" cars, which is a simplification, since in reality most RT Member States apply depreciation rules which diminish the amount of RT. In this sense the calculated figures should be taken to represent an upper limit of the tax loss associated with permanently imported cars under the RT refund schemeTable 1: Tax revenue loss associated with the RT refund schemeMember State | Number of imported cars | Tax revenues loss, mio € | Share of tax revenue loss out of RT revenues, % | Share of tax revenue loss out of total taxation, % |AT | 8775 | 14,5 | 3,3 | 0,01 |DK | 6088 | 112 | 4,5 | 0,12 |FI | 2637 | 20 | 1,9 | 0,03 |EL | 1043 | 15,5 | 1,9 | 0,03 |IE | 10116 | 28,5 | 12,8 | 0,10 |IT | 11264 | 5,9 | 0,6 | 0,00 |NL | 17015 | 90,9 | 3,2 | 0,06 |As a whole, the tax revenue losses associated with refunding the RT on permanently imported cars is not high. In absolute terms the highest losses would occur in Denmark and the Netherlands. In relative terms the biggest loss would be for Ireland, mainly due to the high rate of immigration in comparison with the other Member States, followed by Denmark, in which the RT levels are extraordinary high in comparison with the other Member States. Even in these cases the tax loss would be only about 0,1% of total taxation, and hence the revenue impact of the scheme would be minor. For the same reason also other economic and distributional impacts would be small, as there would be little need to compensate the revenue loss through increases in other taxes.However, it should be noted that the estimations shown in table 1 do not take into account the cross-border trade of passenger cars, which does not involve change of normal residence of the car owner. These movements ("parallel imports") are expected to grow if a RT refund system is put in place. If citizens will not be discouraged by fiscal measures, such as the double payment of RT, they are expected to feel free to buy a (new or used) passenger car registered in another Member State and drive it into the MS of their normal residence. For the time being it is not possible to quantify the revenue loss resulting from these transfers of cars. If such activities are practiced by more and more citizens, the revenue loss from the RT refund system could become more important than that shown in table 1 above.1.1.3. RT removal: economic impactThe impacts of RT removal are wider and more complex than those of the two other policy components (RT refund system and introduction of a CO2 element in the tax base of vehicle related taxes), and also more difficult to quantify. They also depend on the way the tax revenue loss from RT removal is compensated through increases of other taxes to maintain revenue neutrality, and on the assumptions concerning consumer behaviour.The impacts are here considered as after the ten year transitions period, i.e. when the RT is totally abolished.Revenue neutrality assumptionThe fiscal importance of RT revenues varies considerably between the Member States (cf. table 1 and 4 in the Annex), with it being relatively important in only 7-8 of them. Revenue neutrality requires that the tax revenue loss from RT removal is compensated by increasing other passenger car related taxes, in practice the ACT and fuel taxes or both, because only these have sufficiently large tax base to raise sufficient revenues. The amount of this tax shift and the economic and environmental effects of it, are naturally much more important in high RT Member States than low or zero RT Member States.There are two possible scenarios for applying revenue neutrality. In the first scenario the ACT is a tax levied on the whole car stock. Since the tax base of ACT is much larger than that of the RT, which is levied on the purchases of new cars, the increase of ACT levels per car needed to compensate the revenue loss from RT removal is smaller than the RT previously paid on the car purchase. The differences in average ACT levels between the Member States would increase considerably, although they would not be as high as the differences between the average RT levels before the reform. This can be seen from table 2 hereafter[9], which shows the average level of ACT per car before (2005) and after (2015) the RT removal in Member States concerned.Table 2: Impact of RT removal on average ACT level by 2015 (first scenario)-  Source: TIS study, Table 2 and the ACEA Auto data (Historical series) 2001-2002Table 7Summary of Passenger car related taxes in Member States[23]Member State | Registration taxes | Approximate amount of registration taxes and charges (EUR) | Annual circulation taxes and charges | Approximate amounts, annually (EUR) |Belgium | Registration tax ( on the first registration) Tax base is cc | Range from 61,5 to 4,957 | Road tax (based on engine rating) varies according to fluctuations in the retail price index. A supplementary tax on cars, estate cars and minibuses diesel | Range from 57 to 1,458. |Germany | None | Road tax base on cc, weight and EU emission standards ( private cars) |Denmark | Registration tax. Tax base is price incl. VAT. Advantages for save and eco-friendly cars | Rate is differentiated with price, 105% up to DKK 62,700 and 180% of remainder | Green owner's tax, weight tax and equalisation tax |Spain | Registration tax. Tax base is price excl. VAT | Rate is differentiated with cc and diesel or gasoline. Range from 7 to 12 %.Rates can be increased up to 10% by Regional Government | Road tax based on engine rating | Established by local government |Greece | Registration tax. Tax base is the higher between ex-factory value of the vehicle+ freight+insurance or paid price | Rates take into account engine capacity and anti-pollutant technology | Circulation tax levies on a half-yearly basis | Between 38 and 483 € depending of the engine capacity and FH |France | None | Different taxes settled annually : -Graduated tax on motor vehicles (vignette), on company cars and certain commercial vehicles -Tax on company cars | Rates depending of the engine capacity, the age and the district in which it is registered |Italy | Registration tax. Fixed amount that can be increased by each Province up to 20% | 150.81 (180.97) | Ownership tax calculated on the basis of Kw | Rates can be differentiated depending on the Regions |Ireland | Registration tax. Tax base is price incl. VAT | Rates depending on the cc between 22,5 and 30% | Ownership tax calculated on the basis of cc | From 151 to 1343 € per year |Luxembourg | Ownership tax calculated on the basis of cc | From 18.59 to 337.14 € per year |Netherlands | Registration tax. Tax base is price excl. VAT | Rate is differentiated between petrol(45,2%) /diesel(45,2%) | Road tax based on the dead-weight, type of fuel used and the region | Rates can be differentiated depending on the Regions |Austria | Registration tax. Tax base is price excl. VAT. Bonus-malus system for particle emissions | Rate is differentiated with fuel consumption. Maximum 16% | Vehicle tax based on the horse powers | Rates in function of the Kw. |Portugal | Registration tax. Tax base is cm3 | Municipal car tax based on the cc and the age of the vehicle |Finland | Registration tax. Tax base is price excl. VAT. | 28% | Basic tax Power tax | Cars registered before 1/1/94-26 cents/day After 1/1/94-35cents/day 24.45/a for every 100kg |Sweden | None | Annual road tax based on the weight and the fuel used |United Kingdom | None | Road tax based on engine size (existing cars) and on CO2 emissions and fuel type ( new cars) |Czech Republic | None | Road tax but only for passenger cars used for commercial purposes. Various reductions for meeting EURO emission limits etc Technical and emission inspections. | From1200 to 50400 CZK 13-26 (determined by petrol or diesel driven) |Hungary | Consumption tax (RT) - based on engine size and catalytic converter or not. Wealth tax, based on size of engine | 10% -20% of purchase price of car. Differentiated petrol and diesel cars 15HUF/cm3 <1890cm3 20 HUF/cm3 >1890cm3 | Environmental examination depending on fuel type and engine size Motor vehicle tax based on weight, paid annually | 14-33 8000HUF |Latvia | Motor vehicle tax based on vehicle's age at time of acquisition | 373 for new vehicle 223 for 2 year old vehicle | Road traffic tax based on weight | 18 – 107 |Malta | Registration tax (1stregistration) | Vary from 50,5% of car value if <1300cc, up to 75% if>2000 cc | Road tax paid annually | Rate depends of the engine capacity |Slovakia | None | Road tax (only payable on passenger cars used for commercial purposes based on engine size) | From 1700 to 5900 Sk |Slovenia | Registration tax (1st registration) | 1% -13% purchase price | None |Cyprus | Registration tax on new vehicles based on cc, type of vehicles and with a CO2 emissions adjustment | Rates ranging from 0.51 CYP per cc for cars <1450 cc up to 8.01 CYP for cars >2650 cc. -15% for cars emitting <150 g CO2 Km, but +10% for cars >2250 emitting >275g CO2 Km | Road tax based on cc and with a CO2 emissions adjustment | Tax rate depends on the engine capacity |Estonia | None | None |Lithuania | None | None |Poland | Registration tax based on the value/price and the years of the vehicle | Tax rate between 3.1 and 65% | None |Table 8Summary of the results of the public consultationThere were 2040 responses to the consultation –1908 from private individuals, 78 from business, 46 from associations and 8 from official bodies.A. NO AND % OF R ESPONDENTS PER MEMBER STATE1 – Do nothing | 2 – retain existing taxation systems but introduce a refund system to avoid double taxation when cars transfer to another Member State | 3 - the gradual phasing out of registration tax, with a refund system to apply in the meantime, and the introduction of a new tax structure linked to CO2 emissions | 4 - Similar to option (3) but rather than a phasing out of registration tax, merely reducing it to a level that does not exceed 10% of the pre-tax price of the car. | None of the afore-mentioned |8 | 266 | 974 | 718 | 67 |0.4% | 13 | 47.7 | 35.1 | 3.3 |[1] Passenger car means the category M1 as defined in Annex I of Council Directive 70/156/EEC (OJ L 42 of 23.2.1970, p. 1-15), Directive as last amended by Commission Directive 2004/104/EC (OJ L 337,13.11.2004, p.13).[2] COM (1998) 30 final[3] COM (1995) 689 final[4] Particularly the COWI study – Main Report, December 2001[5] Poland only introduced a RT system as from 01.01.2004 therefore the relevant data is currently missing in all three tables (1, 2 and 3)[6] Number of imported cars is calculated on the basis of number of immigrants for the nine MS and car ownership per 1000 inhabitants in the respective country.The data is from the TIS Study, table 45.[7] TREMOVE baseline data.[8] EUROSTAT national accounts data.[9] The table is based on TREMOVE baseline data.[10] Estimations in TIS Study are based on disaggregated data containing sales prices and number of sold cars for 20 car models and nine countries representing 50% of the market. Two u-years (1999-2000) are covered in the analysis (see TIS Study, pp. 70-74.)[11] See the tables 55, 56, 58, and 59 of TIS Study[12] Fiscal Measures to Reduce CO2Emissions from New Passenger Cars. Main report. January 2002. (COWI study). Available at:http://europa.eu.int/comm/taxation_customs/taxation/vehicles_taxation/index.htm[13] BE, DK, SF, DE, IT, NL, PO, SV, UK[14] In the UK the ACT is already CO2 based, which could explain a somewhat different result in comparison with the other countries.[15] See COWI study, table 5.16[16] COWI ENV/C1/SER82002/0029r – Final report November 2003[17] Alliance Internationale de Tourisme et Fédération Internationale de l'Automobile (AIT&FIA)[18] European Federation for Transport and Environment (T&E)[19] TAXUD/255/02 - http://europa.eu.int/comm/taxation_customs/taxation/vehicles_taxation/index.htm[20] COM(2002)431 final[21] A5-0265/2003[22] Estimation made by the Commission Departments (DG TAXUD), based on ACEA's 2002 figures[23] Information, based on ACEA Tax Guide 2005