‘Scrapping new car tax is risky’

Scrapping the sales tax (bpm) on new cars in return for a pay-as-you-drive scheme is risky and would reduce prosperity, according to a confidential report drawn up by three government advisory bodies, the Volkskrant reports on Friday.

The paper says the conclusion is noteworthy because the car industry has made scrapping this tax a condition for winning its support for a pay-as-you-drive scheme.
Transport minister Camiel Eurlings wants to replace road tax (mrb) with the kilometre tax from 2016.
But Christian Democrat and Liberal (VVD) MPs say that the sales tax should be scrapped as well.
Eurlings (CDA) says he too would like to get rid of the sales tax, but wants to keep a small levy because of environmental concerns.
The advisory bodies, including the powerful economic policy unit CPB, say replacing road tax with a tax on actual car use will have a positive effect on reducing traffic congestion.
But replacing the sales tax (45% of the net list value of a car) by a kilometre tax would make motoring so expensive that it will hit ‘economically important journeys’, the Volkskrant quotes the advisory bodies as saying.
The sales tax brings the treasury some €3bn a year.

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