Addition in various classes, discounts, subsidies, CO2 scales and exceptions. The current car taxes were even described by the State Secretary from the recently resigned cabinet as a piece of cake. There is a major overhaul of car taxes in the pipeline, with kilometer charges returning to the political agenda.
Since the Tax and Customs Administration is still not finished with the allowance file, which has been widely reported in the media, it is understandable that car taxes have been somewhat overshadowed. Moreover, the human suffering associated with the surcharges is many times greater than the disadvantage that car buyers experience if they may have to pay a little too much for their new car. However, the recently resigned government promised to the House of Representatives at the beginning of the summer of 2020 that consultations would take place with the car industry about the bpm legislation, which requires adjustment after the introduction of the WLTP measurement cycle. In the past it was promised that a new way of measuring would not lead to higher taxes, but in practice it did. The cabinet denied for a long time, but under pressure from the Chamber and various investigations of the car industry, they had to change tack. All in all, it led to little. Between the lines, the Ministry of Finance admitted in conversations that it might not have been quite right, but that it would be too much work to adjust the rules now.
And there was another problem. Because the bpm is based on CO2 emissions, but because of technical developments cars are becoming more and more efficient every year (on paper), the rates are getting higher. According to the industry, there is no room for improvement in making the fuel engine more economical and cleaner. The current decrease in CO2 averages is due to the mix of conventional fuel cars with EVs and PHEVs and not because fuel engines can become much more efficient. Nevertheless, the CO2 scales fell again by 4.2 percent as of January 1, causing the bpm to rise again in total. That goes against all previous promises. The State Secretary responsible until recently, Hans Vijlbrief (D66), sees it differently; According to him, the increase in bpm may also be the result of a different mix of the fleet, such as the increasing sales of SUVs.
KILOMETER TAX
The car lobby thus faced a difficult choice. The first option: now push her way hard and waste a lot of political capital to perhaps achieve a small adjustment. Second option: leave it alone and focus fully on the next goal: to influence the content of the new ‘car letter’, which is shaping the future of car taxation. The last State Secretary has already hinted that he thinks the current system, which is characterized by discounts, subsidies, CO2 scales, addition classes and other exceptions, is a ‘soupy mess’. He did say it was ‘complicated’ in official meetings. In short, there is a major overhaul of car taxes in the pipeline. The State Secretary would not experience that again anyway, since elections to the House of Representatives are held in March. But the first set-up will come this spring and it has significantly more effect than a few percent more or less bpm. Because where in the last cabinet there was a curse on the use of the word kilometer charge, the cards will probably be different after the elections.
The VVD has long been the biggest opponent of such a system; since this party kept returning to the governing coalition, not much has happened in the last ten years. However, with the growth in the number of electric cars, the tax revenues on fuel (currently around € 8.5 billion per year) could drop rapidly in the next ten years. That is a lot of money that cannot be missed just like that. And even if you would soon be levying mrb and bpm on electric cars, that is not enough to compensate for those tax losses. Then the kilometer charge comes into play. Also at the VVD. Although its introduction may not necessarily benefit a consumer with a tight budget, the automotive industry is in favor of it, seeing it as a means of scrapping that damned bpm, with all its appraisal and parallel import woes. That has always been the ultimate goal of RAI Vereniging and Bovag, because the introduction of kilometer charge to replace mrb and bpm makes new cars a lot cheaper at the bottom of the line. As a result, there is less market disruption compared to neighboring countries. The results of the upcoming elections and subsequent cabinet formation will undoubtedly affect the plans, but for the car sector it is important to get policy officials in the right direction as much as possible until then.
ADDITION 2021 AND BEYOND
The addition currently concerns three categories of vehicles. For hydrogen cars and solar cell cars in 2021, a percentage of 12 percent of the entire amount will apply. 12 percent also applies to electric cars, but up to a maximum of € 40,000. For everything above that you have to count 22 percent, the standard percentage for all other cars. In 2022 this will be 16 percent and will remain so until 2024. Of course, the percentage when purchasing your business car is still fixed for five years. Please note: the government has made a reservation by means of the so-called hand-on-the-tap legislation. If the sale of electric cars goes much faster than expected, the government believes that less stimulation is needed and the addition can be increased sooner. So if extremely many new EVs were sold in the coming months, the addition by 2022 could well be (much) higher than the previously mentioned 16 percent.