A study has found that a group of tax benefits in the European Union commonly given to company cars costs taxpayers over $44 billion each year — while simultaneously discouraging companies from switching corporate fleets over to eco-friendly engines, according to Euronews.
What's happening?
The report by sustainable transport think tank Transport & Environment analyzed four different types of these tax breaks companies in the union's five biggest countries earn from polluting, oil-burning leases. With the incentives totalled up, Italy topped the charts, with the yearly burden on taxpayers pushing $17 billion, followed by Germany, France, and Poland, Euronews reported.
"This is bad climate policy and socially unfair," said Stef Cornelis, director of the electric fleets program at T&E, per Euronews.
Why is tax policy around company cars important?
About 60% of all new car registrations in Europe are company cars, and these subsidies provide pretty great savings on those vehicles. The problem is that the same kinds of benefits are not an option for consumer cars, which are becoming electric quicker than company cars in the EU, Euronews explained.
The reasons behind this gap are logical. Drivers of traditional gas-powered company cars in some of these countries pay over $9,400 less in annual taxes than consumer buyers, per the outlet.
That's some serious carrot-and-sticking — but in the unfortunate direction that adds more planet-warming pollution into the atmosphere with every sale, as opposed to making the fuel savings and clean driving of EVs more accessible.
"Governments in Europe's largest automotive markets are failing to address this absurdity," Cornelis told Euronews.
What's being done about the unfair incentive?
Coming out of the research, T&E has called on the European Commission to set steadfast targets on electrifying large company fleets. Then, to reach those goals, the think tank recommends removing the subsidies that undercut going electric, per Euronews.
The United Kingdom's growing EV numbers are a prime example of this strategy at work. The country's tax benefits for dirty-energy cars are much lower, while incentives for EV drivers are higher. Spain and Belgium have also made positive strides, the outlet reported.
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Cornelis explained that the European Commission's President, Ursula von der Leyen, will help corporations in the lagging nations catch up with consumer vehicle electrification.
"Under her new leadership, the Commission should … finally end this tax anomaly," Cornelis said, per Euronews.
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