Germans Abolish Car Tax. For Now.

by Bertel Schmitt

October 30th, 2008 9:09 AM

Things must be really bad in Deutschland. Before, any German government of any persuasion raised taxes when times were good, and raised them more when times were bad. Debates before important elections usually are about how much taxes should be raised. Imagine McCain saying: “My friends, I will tax you more than that guy.” He’d get the vote in Deutschland. Well, the German government is now worried about auto sales. Scared scheissless is probably the better term. So scared they want to abolish the tax on cars. Totally. Well, at least for a while. And in a discreet green wrapper. Says so in today’s report by the German magazine Der Spiegel. Berlin’s cabinet left it to their Minister of the Environment, Sigmar Gabriel, to give the car crazy Germans the good news this morning: No tax on environmentally friendly cars for the next two years. Zilch. Nada. Nichts. “Environmentally friendly” is defined as compliance with the Euro 5 and Euro 6 norm. Which, for all intents and purposes, means no tax for all new cars coming to the market.

All models sold in Europe after September 1, 2009 must adhere to Euro 5 anyway. Many volume models, from the Audi A3 all the way to the VW Phaeton V6 TDI, do already. To not collide with the German principle of “Gleichbehandlung” (fair treatment– unless when taxing the “Besserverdienende”– the fat cats that make more than the poverty limit), the fine print of the new policy reveals that even an Euro 4 car will be able to drive tax-free for a year. Ke-rist, even the average Chinese CO2-generator-on-wheels survives the Euro 4 test, a stone age norm way back from 2003.

This news is coming on the heels of Brussels signaling that they will back a €40b “soft loan package” for the ailing European car industry. This package also comes in the fashionably green color. The money is earmarked to help the industry meet “ambitious” environmental targets– at least that’s the party line. Our sources quipped that the targets can be met easily, and that the money will be welcome to fund incentive packages. Ein witz, ja?

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Martin Schwoerer on Oct 30, 2008

It won't surprise anybody when I say I think this piece is akin to Joe the Plumber-type hyperbole. The past two German governments have been reducing taxes to a level at which they have been at the OECD average for quite some time. My source for this is the OECD revenue statistics regarding the total tax burdon. Nobody here in Germany has ever won an election with promises to raise taxes. But the electorate is skeptical about voodoo-economic concepts such as trickle-down, or "cut taxes and raise the deficit". Do you blame them? The government is proposing (and only proposing) to suspend taxes on new cars that have up-to-date emissions ratings. That has been done twice in the past, so it's not exactly hot news. And look at the sums we are talking about: a two-liter engined gasoline car rated at Euro 4 currently costs about 140 Euros in taxes per year. So what this bit of news means is that a new-car buyer saves around $400 US -- if the law is actually enacted. And this kind of non-news merits a cheap shot at a foreign country?

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Bertel Schmitt on Oct 30, 2008

@Martin: Cheap shot, written by a still citizen of same country no less. No wonder I was deported to China .....

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