ECONOMY

Alexiadis points to vehicle fuel levy hike to cover road tax cut

alexiadis-points-to-vehicle-fuel-levy-hike-to-cover-road-tax-cut

The Finance Ministry appears determined to implement its plan for the imposition of additional taxes on gasoline, diesel and gas next year, thinking that this will increase state revenues. The ministry’s plans also include a change in the way road tax is calculated, to take into account the commercial value and the engine size of each vehicle.

Those plans are generating great opposition from the car and fuel retail markets, with another cause for concern for the car sales sector: The incentive of providing owners who take their old vehicles off the roads with a subsidy to purchase a new one appears unlikely to be extended into 2016 despite being the only way to warm up the market.

Speaking on Skai TV on Saturday, Alternate Finance Minister Tryfon Alexiadis said the government is considering tying the amount paid in road tax to vehicles’ fuel consumption. Without specifying the details, he said that the measure would bring road tax down in the future, thereby allowing those who have handed in their registration plates to get them back and use their vehicles again. He added that the measure would place the burden on those who use their cars more and those who own bigger vehicles.

Alexiadis’s proposal appears to be based on that made in the summer by the Greek Association of Traders & Importers of Cars (SEEAE) regarding the complete abolition of road tax and its replacement with additional consumption tax on fuel. This association mostly represents companies that import and trade in used cars.

However, that proposal is opposed by the Association of Motor Vehicles Importers-Representatives (SEAA), with a source saying that “already all the talk about road tax changes in the previous months has made the market freeze, and now the tax has changed it may change again.”

The reaction from gas station owners was much stronger: “We’d like to think the alternate minister was joking when he made those statements,” said POPEK, one of their two associations, underscoring the fact that taxes today already comprise 67.16 percent of the retail price of unleaded gasoline. The other association, OBE, referred to an upcoming major decline in consumption with negative consequences for both vehicle owners and the companies.

The ministry has said nothing about extending the vehicle withdrawal incentive, which expires on December 20. Importers have called for an extension of less than a year, at least for the period until the new measures on the changes to car taxation are determined. The ministry, on the other hand, is considering the complete abolition of the incentive.