France to Assess Annual Tax on Most-Polluting Vehicle Owners

Traffic at the Arc de Triomphe
photo by Adam Comerford

While pure free-marketeers will continue to argue that eco-taxes interfere with the pure functioning of markets, it is increasingly being acknowledged that some means of incorporating the environmental costs of a product must be included into the price which the consumer pays. If this is done—if environmental externalities and internalized into prices, in ecological economics speak—then the true lifecycle costs of a product are taken into account, and a more informed decision can be made on the part of the consumer.

In a practical example of this, France has expanded its so-called “bonus-malus” system of taxes and rewards on cars, from a one-time penalty or bonus at the time or purchase to an annual assessment. Ideally, this should probably be included in the price paid at the dealer and not be something assessed by the government, but it's a good start.

Polluting vehicles taxed, Less-polluting ones receive bonus
Currently car purchases have to pay between 200 and 2,600 euros at the time of purchase if their vehicle emits more that 250 grams of CO2 per kilometer, while they receive a “bonus” of 200-1000 euros if the car is deemed to be more environmentally friendly. While the penalty for the most polluting vehicles will be assessed annually, the bonus will continue to only apply at the time of purchase.

According the original article in Le Parisien, Austria is launching a similar system of taxes to encourage consumers to make more eco-friendly buying decisions.

via :: Reuters and :: Le Parisien

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