The White Paper asks to quintuple the collection of the registration tax

The committee of experts for tax reform does not advocate the abolition of the registration tax and its replacement by another tax that taxes the use of the vehicle, as defended by the employers of the sector.

Experts consider in the White Paper on the Tax Reform that they delivered to the Minister of Finance, María Jesús Montero, last week, that “empirical evidence shows that taxes on the acquisition of vehicles are more effective in directing the purchasing decisions of consumers than annual circulation taxes.”

Thus, experts propose three scenarios of rise of this type of tax. The first of these would be to increase the number of tranches and the increase in tax rates, with the aim of encouraging, “with greater insistence”, the purchase of low-emission vehicles. Thus, they establish two scenarios. In the first of them, the exemption from the payment of this tax is contemplated to models with carbon dioxide (_CO2) emissions below 127 grams per kilometer (currently it is at 120 grams). In addition, it rounds up all the sections: between 127 and 155 grams will pay 5%; between 152 and 175 gr/km, 10% and those over 175 gr/km, 15%. Currently, the tranches are set at 4.75%, 9.75% and 14.75%, respectively. In the second scenario, the one with the highest intensity, it contemplates a payment rate of 5% to models with CO emissions.₂ of between 55 and 127 grams; 10% to models between 127 and 152 grams; 15% to those with emissions between 152 and 175 grams; and 20% to those who emit more than 175 grams of CO₂ .

Another proposal handled by the committee of experts, made up of 17 professionals, is the introduction of a supplement on the weight of the vehicle above a certain limit, following the solution that France will apply from 2022. The idea is to tax heavier models, a solution that would affect larger SUV models. Thus, models of more than 1,800 kilos would pay a supplement of 10 euros per additional kilo, with the aim of discouraging the purchase of these models.

The last of them defends the replacement of the current ad-valorem tax on the price by a unit tax that is applied on the expected emissions of the vehicle, taking as a reference the current Dutch registration tax. Thus, models with emissions between 1 and 86 grams would pay 0.33 euros per gram of CO₂; those between 87 and 111 g, 20 euros; those between 112 and 155 g, EUR 44; those between 156 and 172 g, 72 euros; and those of more than 173 g, 144 euros. To this would be added the extra cost for the weight of 10 euros per additional kilo greater than 1,800 kilos.

Increase in revenue

As an ultimate goal, the increase in collection is established. Thus, in the first case the coffers would enter 862.6 million euros; in the second, the collection would reach 1,846.9 million; and in the last one, it would be possible to raise 2,335 million. If the figures are compared with what was collected in 2021, 467.9 million, 25.4% more compared to 2020; in the first case, the collection would be doubled; in the second it would almost quadruple; and in the third it would increase fivefold.

Anfac claims a tax that taxes the use

Since 2020, the employers’ association of vehicle manufacturers (Anfac) asks to change the current registration tax for another that taxes the use. All this in a market that accumulates four consecutive years of falls in sales. Thus, the purchase of zero-emission vehicles would be encouraged, while allowing an annual collection of 2,700 million euros per year, more than what the experts propose in the three proposals presented to the Ministry of Finance.

Source: The Economist