ACEA calls on governments to address the negative tax impact of the new WLTP car emissions test
27 July 2017
27 July 2017
The European Automobile Manufacturers Association (ACEA) has today (Thursday 27 July) issued a press release calling for governments to address the negative tax impact of the new WLTP car emissions test.
From 1 September this year, the new test for measuring emissions from cars, called WLTP, will officially apply to all new car types (models that are introduced on the European market for the first time). One year later, from September 2018, the lab test will be extended to all new cars sold across the EU. With little more than a month left, Europe’s auto manufacturers caution that consumers should not be faced with increased car taxation following the introduction of this new test.
WLTP will introduce much more realistic conditions for measuring emissions, such as CO2, than the current lab test (NEDC). It will therefore provide a more accurate basis for calculating a car’s fuel consumption and emissions. The switch to WLTP will also have implications on vehicle taxation.
Currently, 19 EU member states apply CO2 taxation to cars, based on the CO2 values from the lab test. Simply because it is more rigorous than the old test, WLTP will result in a higher CO2 value for a specific vehicle compared to NEDC. However, as the performance of the car itself will not be affected, ACEA calls on national governments to ensure that the transition to WLTP will not negatively impact vehicle taxation.
Even though WLTP will come into force this September, not all EU member states are adequately prepared for its introduction. If they simply apply the existing CO2 tax scheme to the new WLTP values, they will effectively put a new car type introduced to the market after September in a higher tax band than a similar car hitting the market just before that date.
′National governments need to act to ensure that CO2-based taxation will be fair, since WLTP will result in a higher CO2 value for the one and same vehicle compared to NEDC,’ stated ACEA Secretary General, Erik Jonnaert. ′If they fail to do so, the introduction of the new test procedure could increase the financial burden on consumers.’
For example, as of September 2017 one car model might still have a value of 100g CO2/km using the old NEDC test, but a recently approved car might come in at around 120g CO2/km under the new WLTP test. The cars are nearly identical, except one has the latest test results. If a country’s CO2 tax scheme were to remain unchanged, this would unjustly increase the tax burden on certain consumers and lead to overall confusion.
In reality, the introduction of WLTP figures will undoubtedly cause confusion among consumers as they will be faced with two sets of emissions figures as ACEA previously highlighted back in April. However, as yet, no European government has committed to assigning tax bands to new vehicles based on the WLTP results and so vehicles will not necessarily face tax hikes in the near term. One could therefore argue that carmakers actually have little to be concerned about but with only just over a month to go before WLTP is rolled out, governments do need to be preparing to adjust their vehicle tax regimes. Otherwise, the whole exercise runs the risk of being rather futile as it will merely introduce additional transparency (and, in turn, confusion) for consumers to make a more informed purchase decision based on the more accurate emissions and consumption figures – but the vehicles will not be taxed accordingly. This is essentially why Jonnaert has previously suggested that EU member states go for a ′one shot’ introduction of WLTP=based tax regimes from January 2019, from when all new vehicles will only be tested under WLTP, although end-of-series vehicles will have an extra year’s exemption according to a WLTP facts document produced by ACEA.