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Finland rejigs emissions-based car taxes

Finland announced on Monday it is adjusting the registration tax according to the actual emission values of new-registered vehicles.

Uusia autoja vantaalaisessa autoliikkeessä.
Auton omistajanvaihdos jouduttiin tekemään vanhaan tapaan katsastuskonttorilla tällä viikolla, koska Trafi sulki verkkopalvelunsa. Kaikkia uusia autoja ei myöskään voitu luovuttaa asiakkaille. Image: Sasha Silvala / Yle

In September Finland adjusted the registration tax table based on data from research centre of the EU Commission's JRC (Joint Research Centre).

But in an unexpected move on Monday, the finance ministry said it is adjusting the country's emissions-based vehicle tax again, effectively levelling-out the tax hike for owners of cars that pollute more than others on the roads.

The changes are expected to be presented to lawmakers on Wednesday, but finance minister Petteri Orpo said the new tax scheme was already in effect on Monday.

Without these changes the tax burden would have increased annually by some 90 million euros, according to an assessment reached by the ministry.

The sudden move should avoid delayed purchases as people wait for greater discounts before buying new vehicles. Finland has some of the highest taxes on new car purchases in the EU.

The ministry said that according to a newly-implemented measuring system, Finland's overall vehicle emissions levels will not be affected by the changes.

The new scheme is based on data from the Technical Research Centre of Finland, VTT.

To assure a tax neutral result, the ministry's new scheme is based on actual WLTP (the EU'S Worldwide Harmonised Light Vehicle Test Procedure) and NEDC (New European Driving Cycle) measurements of carbon dioxide emission values collected from the new registrations by VTT.

The WLTP guidelines were the replacement for a lab test called the New European Driving Cycle designed in the 1980s.

Auto dealers pleased

Managing director of Finland's Association of Automobile Importers, Tero Kallio said he is pleased with the ministry's decision.

"This is good. When the new way of measuring emissions was introduced around Europe in September, it raised the emissions results of vehicles and also raised the taxes on them. This adjustment neutralises the raised tax," Kallio said, adding that Finland was the first country to make such a change.

Kallio praised the government's initiative and said that the cost of a medium-priced car with medium emissions level car will decrease by about a thousand euros, and that he is expecting to see an increase in interested car buyers.

Edit: Updated at 5.44pm on 5 December to reflect the fact that VTT does not have its test procedure or determine emissions targets for vehicles in Finland. Rather, the agency reviewed the current system of taxes and proposed a reduction in the rates. Edited at 7.35pm on 5 December to amend errors regarding the technical basis of the changes.

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