Analysis of the planned Flemish reform of the circulation taxes
In July 2006, the Flemish government has agreed to the use of Ecoscore for the reform of the circulation tax. The aim of this note was to examine the costs and benefits for Flanders of the Ecoscore tax proposal for cars. We have also analysed another proposal: the reform of the annual tax on freight transport.
Trucks would get an increase or decrease on the current (annual) transport taxes according to the Euro standard of the engine. Trucks with a PM trap or that already comply with the future emission standards, get discount. The proposed tax reform is very complex, probably little effective, and increases the current tax income to the disadvantage of future tax income. It would be better to prepare a good intelligent road pricing that allows the differentiation to the Euro standard, the place and time of use. Old polluting trucks are then automatically limited in their use.
The environmental impact of cars is especially large for diesel cars, which pollute significantly more than petrol cars. Discouraging diesel cars with appropriate tax is the most urgent and obvious measure. This can be introduced in the short term by increasing the taxes on the diesel fuel or by increasing the vehicle tax on the possession of a diesel car. A taxation based on a simplified Ecoscore ("path 1") is reasonable, if the differentiation to CO2 emissions is omitted. CO2 costs are already recuperated more than necessary by the taxes on fuel. An extra tax on CO2 in the transport sector is therefore ineffective, it would only stimulate to save taxes. The setting-up of a taxation based on "complete" Ecoscore shows not much added value compared to a taxation based on the Euro standards, and is moreover administratively almost impossible since it would require extra approval tests for most of the cars.
Final report: advies_voertuigbelastingen.pdf (in Dutch)
Steunpunt Fiscaliteit & Begroting, in cooperation with the Department FB of the Flemish Government
Griet De Ceuster
Griet De Ceuster
+32 16 31.77.30