Federal Government Plans Penalty Tax for Diesel & Petrol Engines

The European decision to enforce a policy of banning internal combustion engines and to only allow new climate-neutral cars from 2035 onwards is only one of the steps in the direction of more sustainable mobility. In order to ensure that the practical prerequisites for meeting the climate targets can be met - and at the same time a rethinking of transport habits can take place - further measures must also be taken.  

One of these could apparently be the conversion of the motor vehicle tax into a penalty tax for all vehicles with diesel or petrol engines. In this way, the federal government wants to follow the so-called polluter-pays principle and impose a heavier burden on vehicles with high CO2 emissions. The income of the owner would not play a role. Whether other pollutants emitted will also be included is still unclear. This - as well as the concrete implementation of the climate protection measures in 2022 - "are currently still being discussed within the federal government". 

The increase in the tax contribution for internal combustion vehicles, in addition to the European registration ban, is intended to trigger negative purchasing effects for the most polluting vehicles and at the same time make electromobility more attractive to the world. To this end, all owners of electric vehicles will receive a bonus and pay less tax.  

But reforming the vehicle tax system is not the only financial measure German politicians could take. According to a press report, Federal Minister of Economics Robert Habeck (Greens) is considering introducing a new climate levy on new car registrations. "In combination with the continuation of the e-car premium, a CO2-dependent climate levy on new car registrations would make sense" to rebalance the car market. This should not only lower the price of electrically powered vehicles compared to the current level, but even make them cheaper than combustion cars of the same rank. Also possible is an increase in company car taxation in the case of diesel and petrol cars. 

But will these measures be enough to make electric cars accessible to a larger part of the population?  Could these really enable a step forward in mobility electrification and transport turnaround for Germany? With a price range from about 20,000 euros for the cheaper models to 270,000 for the most expensive ones, the new acquisition costs of an e-car are currently still well above combustion engine prices. New buyers would also have to reckon with rising charging costs due to the crisis-related price increases of energy goods such as electricity. 

Unfortunately, it is doubtful that tax changes alone can counteract these trends. Together with other investments, however, a mobility turnaround in favour of e-cars is still possible. The government has already processed its targets for the emergency climate protection programme in the transport sector. If these are to correspond to the original plans and be implemented efficiently, Germany could still have a greener future ahead of it.