Fair & Low Carbon Vehicle Taxation in Europe: A comparison of CO2-based car taxation in EU-28, Norway and Switzerland

In order to achieve the European Union's emission reduction targets for new passenger cars and to make real progress regarding the actual emissions in the road transport sector, European countries have to improve and sharpen their political instruments at hand. There is plenty of room to align the fiscal incentive scheme with climate and environmental policy goals by using the available vehicle and related taxes much more efficiently. Looking at the 28 European member countries plus Norway and Switzerland, many cases of well-designed and effective vehicle taxation are available. This paper compares the different tax systems and derives several policy recommendations. For eight countries (Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain and the United Kingdom), a more detailed comparison among four example verhicles is conducted and a ranking compiled. While some countries have already introduced CO2-based tax systems and achieve substantial CO2-emission reductions, other countries' systems are still in need of reform.