Governments should address negative tax impact of new car emissions 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, the European Automobile Manufacturers’ Association (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. Taxation systems need to be adapted to avoid this scenario.