End in sight for car tax

TAXING CARS at point of sale could soon be a thing of the past if the European Commission gets its way. Last week, the Commission unveiled a proposal to progressively substitute the car registration tax, Imposto Automóvel (IA), with a high annual traffic or road tax system, like the one in Germany.

António Cavaco, from the Associação do Comércio Automóvel de Portugal (ACAP), the Portuguese commercial automobile association, said the abolition should have been done years ago and welcomed the proposed scrapping of the IA saying: “It’s like a worker having to pay a poll tax or IVA (VAT) on his future earnings before he’s even earned it.”

He continued: “If I have to pay the IA and then my car is stolen, or I have an accident in which it becomes a write off, I’ve lost all that tax and then I’d have to pay it all over again when I bought another vehicle.”

The idea for the new annual road traffic tax (Imposto de Circulação) is that cars that pollute the environment the most would pay a higher tariff rather than one based on the engine capacity.

The ACAP declined to say when exactly the new road traffic tax would be introduced, or how much the tax would be, but gave some guidelines. “A detailed tax scale hasn’t been worked out yet, but if you bought a car in which the current IA was 2,500 euros, and divide this value by 12 years (the medium life span for the average vehicle), the new road traffic tax would be 208 euros per year, or 17 euros a month.” C.G.