Abstract
In this paper, a Belgian tax reform plan is elaborated to respond to the EU proposal that requires member states to restructure passenger car taxation systems, preferentially based on the CO2 emissions of the car. A tax orientation on CO2 emissions alone might however favour diesel vehicles, characterised by a higher fuel efficiency, whereas they release more polluting emissions (PM and NOx) than comparable gasoline vehicles. This paper introduces a methodology, the Ecoscore, as a potential tax assessment basis. The Ecoscore is based on a well-to-wheel framework and enables a comparison of the environmental burden caused by vehicles with different drive trains and using different fuels. A new proposal for a fixed vehicle taxation system, based on the Ecoscore, is launched. In addition, its impact on the life cycle cost of conventional as well as alternative fuelled cars is measured in order to examine its steering effect towards a cleaner vehicle choice. The overall result is that current tax distortions can be corrected by restructuring the vehicle registration tax and annual circulation tax, based on the Ecoscore. To stimulate behavioural changes, such a fiscal policy should however be paired with additional policies that act on the other important aspects that determine the car purchase decision.
Highlights
Reducing the use of fossil fuels for road transport is currently one of the most important sustainability objectives of the European Union [1]
The lower fit (R2 of 67%) confirms the results of Sections 2.2 (LCC) and 3.2 (Ecoscore): in most of the cases, diesel vehicles are currently under-taxed in relation to their total environmental impact (TI), whereas AFVs are over-taxed during their vehicle useful lifetime
This paper developed a life cycle cost (LCC) tool to evaluate the financial attractiveness of conventionally fuelled cars and cleaner cars in the Belgian context
Summary
Reducing the use of fossil fuels for road transport is currently one of the most important sustainability objectives of the European Union [1]. In addition to policy measures at the EU level, member states are encouraged to apply a range of fiscal measures to reduce CO2 emissions from passenger cars. In 2005, the European Commission (EC) launched a proposal for a Council Directive that requires member states to restructure their passenger car taxation systems [2]. The aim of this proposal is twofold It hopes to improve the functioning of the internal market by eliminating existing tax obstacles such as double taxation, tax-induced cross-border transfer of cars, distortions and inefficiencies. It aims to promote sustainability by restructuring the vehicle registration tax (VRT) and the annual circulation tax (ACT)
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