The European Automobile Manufacturers’ Association (ACEA) released its Tax Guide 2010 last week. This publication is read by European Union leaders and auto industry experts to determine the financial barriers and incentives to green vehicle ownership. The highlight from Tax Guide 2010 is that 17 out of the union’s 27 members currently enforce taxes on carbon emissions from passenger vehicles. These carbon taxes were responsible for $505 billion in collections for 17 EU members in 2009 according to the ACEA.
ACEA notes that only nine member nations charged carbon taxes on vehicles in 2006. These numbers increased to 11 in 2007, 14 in 2008 and 16 in 2009. These green vehicle sticks are not the only ways in which EU nations are spurring interest in green vehicles. Tax Guide 2010 points to the use of plug-in incentives as carrots for consumers and fleet purchases in the European Union. Hybrid and plug-in incentives are now used in 15 member states in the EU with the Czech Republic, Romania and Belgium joining this list in 2009. Based on ACEA’s assessment of the green vehicle market, they have recommended further tax incentives to spur additional purchases.
In the early going, it seems like EU members are making a real difference in terms of market share for low-emissions vehicles. High-emitting vehicles as defined by the Euro 5 standard have gone from 80% of the market in 1995 to 23% of the market in 2009. This shift in the marketplace is due in part to the shift away from heavy trucks and SUVs with poor fuel economy to efficient compacts and sedans. As more plug-in and hybrid options hit the market, EU member nations will be proven right in using both the carrot and the stick.
Tax Guide 2010 notes an ACEA recommendation for incentives for manufacturers as a corollary to consumer incentives and carbon taxes. This trio of market factors needs to be brought into harmony if the European Union is hoping to achieve lower emissions and higher fuel economy. Consumers will have difficult decisions to make if manufacturers are unable to get hybrids and plug-ins to the marketplace in a timely manner. With tax incentives based on green vehicle development, automakers in the European Union will allow consumers to take advantage of incentives while avoiding carbon taxes.
