Brussels, Belgium – A new report by the European Union (EU) shows that 17 Member States are levying CO2-related taxes on passenger cars, while 15 governments are providing tax incentives for electric vehicles.

The 17 countries that levy passenger car taxes partially or totally based on the car’s CO2 emissions and/or fuel consumption are Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom.

In 2008, only 14 countries taxed by CO2 emissions, up from 11 in 2007, and nine in 2006. New to the list are Germany, which introduced its system in the summer of 2009, and Latvia. Italy chose not to prolong its one-year fleet renewal scheme, which included both CO2-based incentives and those for electric vehicles.

Incentives for electrically chargeable vehicles are now applied in all Western European countries, except for Italy and Luxembourg. Belgium is new to the list. The incentives mainly consist of tax reductions and exemptions, as well as bonus payments to those who buy electric vehicles.

The European car industry supports the further introduction of fiscal incentives for fuel efficiency, saying that tax measures are an important tool in shaping consumer demand for fuel-efficient cars, and help to create a market for breakthrough technologies, especially during the introduction phase. Innovations generally enter the market initially in low volumes and at a significant cost premium, which needs to be offset by a positive policy framework.

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