Handelsblatt Exclusive Government to Hike Car Tax in Wake of Emissions Scandal

Finance Minister Wolfgang Schäuble plans to collect €1.1 billion ($1.17 billion) in additional revenue from 2018 to 2022 through a hidden hike in a car tax, according to draft legislation obtained by Handelsblatt.
Finance Minister Wolfgang Schäuble, picture source: AP

Finance Minister Wolfgang Schäuble plans to collect €1.1 billion ($1.17 billion) in additional revenue from 2018 to 2022 through a hidden hike in a car tax, according to draft legislation obtained by Handelsblatt.

The draft, to be approved by Chancellor Angela Merkel's cabinet Wednesday, seems to break a campaign pledge made by Ms. Merkel and Mr. Schäuble’s center-right Christian Democrats, who promised not to raise taxes at a time when Germany is running historic budget surpluses.

The tax hike on cars stems from the VW diesel emissions scandal. In the wake of the scandal, the European Union moved quickly to introduce real-world tests, which often find higher emissions values than lab tests. The new draft law allows Germany to factor the higher emissions values into its car tax, resulting in a bump in the rate.

While the European Union plans to introduce the new testing system in phases starting in May, Germany plans to implement it in one fell swoop in September 2018.

According to forecasts from the Finance Ministry, revenues from the car tax will rise as a result by €10 million in 2018, €105 million in 2016, €220 million in 2020, €330 million in 2021 and €435 million in 2022. The ministry however says the figures are unreliable and the estimate will not be part of the draft law to be presented Wednesday.