Of the 38 countries of the Organization for Economic Cooperation and Development (OECD), only Estonia, Costa Rica and Colombia do not apply a vehicle operating tax based on carbon dioxide emissions or fuel consumption, ERR News writes.
Vehicle taxes usually also cover registration costs, VAT, excise duty on fuel, road maintenance charges and the like, and are payable either once when you buy the car or as an annual payment. The difference is usually whether the state chooses to charge one of these fees or apply both. In Estonia, neither one nor the other has to be paid at the moment, but the new coalition is determined to change that.
The OECD report on consumption taxes in 2022 reads: “Taxes related to the purchase, ownership and operation of vehicles were introduced in most OECD countries in the first half of the 20th century and have become an important source of tax revenue.” The report points out that vehicle and operating charges in their broadest sense are an excellent example of how to apply the full spectrum of consumption taxes, which over time also include environmental and climate goals. The OECD emphasizes that vehicle operating taxes, the size of which depends on the amount of pollution caused by the car,
initially make the buyer think about buying a more environmentally friendly car,
and adds that only three of the organization’s 38 member states do not consider environmental and fuel economy aspects when determining the amount of the tax.
In October, the European Federation for Transport and the Environment published an overview of the taxes they applied to vehicles. Of the 31 countries reviewed, nine do not apply a purchase tax, while four do not have to pay an annual car tax. Ten countries do not consider carbon dioxide emissions when determining the amount of the tax. In 20 countries, the amount of carbon dioxide emissions is taken into account when determining the amount of tax on the purchase of a vehicle. In ten countries, the purchase tax is determined by assessing fuel consumption, six countries take into account the type of fuel, and five – engine power.
Three countries apply tax based on engine size and vehicle age,
while some others consider vehicle size, weight or length.
The European Federation for Transport and the Environment has also divided countries into two groups: those with good car tax practices and those with bad practices. Estonia is in the second category. The report states: “Compared to good policy practice, the identified cases of bad policy practice constitute a longer list of noteworthy examples that range from the complete lack of taxation in Czechia and Estonia to attempts at taxation that border on the absurd, such as the subsidy pots for zero-emission cars being exhausted in eight days in the Netherlands and two minutes in Estonia and Croatia.” However, it is added that Estonia’s special status in terms of vehicle operating taxes allows learning from the mistakes of others and using the best examples from other countries to build its own system.