German Government Adopts Flawed CO2-Based Car Tax

Berlin reichstag photo

Incentives. It's All About Incentives.
The beauty of aligning incentives with the protection of nature is that even those who don't care about it will take the right decisions. One way to do that with cars is to measure externalities, and price them in the cost of a vehicle. If a car produces more air pollution or greenhouse gases, it should be more expensive (this can be done in a revenue neutral way, with the money thus raised use to lower taxes elsewhere). That's kind of what the German ruling coalition just did, though with some important flaws...From Bloomberg:

Germany’s ruling coalition has reached an agreement on a new automobile tax that will focus on cutting carbon-dioxide emissions while avoiding significant tax increases for large sport-utility vehicles.

The rule will cut the annual levy on Daimler AG’s Smart ForTwo model to 20 euros from the present 67 euros, while an owner of VW’s Audi Q7 Quattro sport utility vehicle will pay 926 euros, unchanged from the current fee, the Finance Ministry said.

You can see the problem immediately. They are basing the tax on CO2 emissions, but the end result isn't an increase for the biggest emitters. There's a reduction for fuel efficient cars, and that will provide an incentive, but there's no real incentive for the people who were thinking about buying a gas guzzler to reconsider.

Green Party environment expert Bärbel Höhn told the Saarbrücker Zeitung, "is a classic case of deceptive packaging. It is labelled 'climate protection.' But in fact it doesn't do much to change the status quo."

Come on, German government. You had the right idea, you just didn't implement it in a way that would make a real difference (probably because of intense lobbying from the German automakers).

Via Der Spiegel, Bloomberg, AutoblogGreen
Photo: Berlin Reichstag, GPL
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