New eco-tax for company cars

12 October 2004

BRUSSELS – The newly agreed Belgian federal budget is to slap a tax hike on company cars that the government hopes will net the state up to EUR 140 million.

The tax will affect almost 600,000 vehicles, or around ten percent of all cars in Belgium.

The new tax, which will come into force next year, is designed to encourage employers to provide their staff with environmentally friendly vehicles.

Under the system employers will have to pay a series a flat rate fees for company cars ranging from EUR 250 to EUR 1320.

The more pollution a car causes, the higher the charge.

Cars will be categorised from A to G depending on their carbon dioxide emissions.

The heftiest charges will be levied on large cylinder vehicles in the F and G categories.

The government hopes the move will encourage firms to choose cleaner cars in order to cut costs.

Belgium’s budget for 2005 was agreed at an all night session of top government ministers on Monday night.

It was formally presented to Parliament by Prime Minister Guy Verhofstadt on Tuesday afternoon.

Aside from the new car taxes, a larger eco-tax will also be levied on drink packaging.

This measure is expected to bring in an additional EUR 170 million, which will be poured into the social security budget.

But it is not clear whether the move will make much difference to social security budget’s huge deficit, expected to run at EUR 1 billion next year.

This is because in Tuesday’s budget the government also pledged to increase spending on pensions and benefits.

The new budget also sees increased taxes for rolling tobacco and cigarettes.

Subject: Belgian news