Things must be really bad in Deutschland. Before, any German government of any persuasion raised taxes when times were good, and raised them more when times were bad. Debates before important elections usually are about how much taxes should be raised. Imagine McCain saying: “My friends, I will tax you more than that guy.” He’d get the vote in Deutschland. Well, the German government is now worried about auto sales. Scared scheissless is probably the better term. So scared they want to abolish the tax on cars. Totally. Well, at least for a while. And in a discreet green wrapper. Says so in today’s report by the German magazine Der Spiegel. Berlin’s cabinet left it to their Minister of the Environment, Sigmar Gabriel, to give the car crazy Germans the good news this morning: No tax on environmentally friendly cars for the next two years. Zilch. Nada. Nichts. “Environmentally friendly” is defined as compliance with the Euro 5 and Euro 6 norm. Which, for all intents and purposes, means no tax for all new cars coming to the market.
All models sold in Europe after September 1, 2009 must adhere to Euro 5 anyway. Many volume models, from the Audi A3 all the way to the VW Phaeton V6 TDI, do already. To not collide with the German principle of “Gleichbehandlung” (fair treatment– unless when taxing the “Besserverdienende”– the fat cats that make more than the poverty limit), the fine print of the new policy reveals that even an Euro 4 car will be able to drive tax-free for a year. Ke-rist, even the average Chinese CO2-generator-on-wheels survives the Euro 4 test, a stone age norm way back from 2003.
This news is coming on the heels of Brussels signaling that they will back a €40b “soft loan package” for the ailing European car industry. This package also comes in the fashionably green color. The money is earmarked to help the industry meet “ambitious” environmental targets– at least that’s the party line. Our sources quipped that the targets can be met easily, and that the money will be welcome to fund incentive packages. Ein witz, ja?
It must really be tough? On one hand, “Save the Earth,” and on the other hand, won’t the children, the poor and the jobless suffer?! What is a great socialist cradle to grave society suppose to do?
Flash: German jobless rate below 3 Million. Lowest since 15 years. Experts warn of euphoria. (What they don’t get: Demographics. Germany’s boomers slowly retire. Less workers in the market….)
There´s one important thing that´s not mentioned in here – the car tax is collected by the 16 states in Germany (and spent within their budget).
That kinda makes it easy for the federal Government to promise new car buyers 2 years of no car taxes.
My personal opinion: Wait and see what the Ministerpräsidenten (Governors of the 16 states) will say when they hear about these plans on the radio or TV. (things like this have happened before)
Just imagine what Ahhhnold Schwarzenegger would say if George W. was promising to cut any California state taxes. Don´t think that would work out well…
One more quick thing – the Federal Government will still continue to collect the sales tax (“value added tax”) at a rate of currently 19% anywhere in Germany under these plans discussed.
So if Hans Meier decides to buy a VW Passat at a net price of EUR 25,000, that would still be EUR 4,750 of taxes for the state.
Compare that to an annual tax – that has to be paid for being allowed to use the car – of around EUR 150 (petrol engine) and around EUR 350 (diesel engine) and it´s easy to see what the reason for this plan is.
To do something good for the environment, what else?
GermanGuy: German Fince Minister Peer Steinbrück said he would refund the abolished taxes to the states ….
In the meantime, the news have triggered a lively discussion in Deutschland. The VDA, the assosciation of German auto manufacturers calls the measure “the starting gun for a rebound of auto sales.” Pundit Professor Dudenhöffer, never short of witty remarks, calls it “a joke.” He correctly points out (as did Germanguy) that the tax is only a few hundred Euro, and abolishing it “won’t sell one car more.” The environmentalists hate the supposedly greener than green program: “Camouflaged as an investemnt program and climate protection, they are slipping us a year-end sale of old gas guzzlers,” said Renate Künast, head of the Green Party.
Bertel,
Are the German greens really green, or simply big government socialists behind a green fascade?
Points to Airhen for the being first to the right answer.
It won’t surprise anybody when I say I think this piece is akin to Joe the Plumber-type hyperbole.
The past two German governments have been reducing taxes to a level at which they have been at the OECD average for quite some time. My source for this is the OECD revenue statistics regarding the total tax burdon.
Nobody here in Germany has ever won an election with promises to raise taxes. But the electorate is skeptical about voodoo-economic concepts such as trickle-down, or “cut taxes and raise the deficit”. Do you blame them?
The government is proposing (and only proposing) to suspend taxes on new cars that have up-to-date emissions ratings. That has been done twice in the past, so it’s not exactly hot news.
And look at the sums we are talking about: a two-liter engined gasoline car rated at Euro 4 currently costs about 140 Euros in taxes per year. So what this bit of news means is that a new-car buyer saves around $400 US — if the law is actually enacted. And this kind of non-news merits a cheap shot at a foreign country?
@Martin: Cheap shot, written by a still citizen of same country no less. No wonder I was deported to China …..