Road taxes in different countries
May 26, 2017

Road taxes in different countries

The general principle of levying car taxes is to encourage consumers to purchase eco-friendly and small cars. The less fuel your car consumes, the lower its damage to the environment.

The tax itself is levied differently. Some places it is included in the VAT, then it is included in the registration payment or technical passport, plus an annual payment (in Spain). Some places, the transport tax is included in the cost of fuel and payments to the federal budget or the municipal level budget occur from each unit of purchased gasoline (USA). The average rate of “fuel tax” in the US, which includes federal and local fees, is about 45 cents. American owners of electric vehicles do not pay taxes at all. The question of appointing a transport tax for them periodically rises, but this has not been resolved yet.

Undoubtedly, advantages of such an approach to levying transportation tax includes a complete absence of bureaucracy and loss of time for filing receipts, as well as fairness. After all, payment is proportional to the intensity of car use. Among shortcomings is the rise of fuel price.

At the same time there are also preferential tariffs of transport taxes in each country. For example, in Spain a 50% discount can be given to large families, while taxi drivers and persons with disabilities are fully exempt from paying taxes. In Ukraine privileges are enjoyed by the Chernobyl victims, veterans of war and laborers.

In France the tax varies depending on the degree of purity of the exhaust and engine power. Most “dirty” cars (off-road “monsters” or supercars) are taxed at the highest rate. In 2006 the French government took a series of measures that encourage citizens in every possible way to purchase environmentally friendly cars.

Denmark does the same, where a VAT is paid when buying a car reaches 175% of its value. In comparison, in Israel such a value is 117%, in Belgium — 20%, in UK — 15%.

In addition, authorities of each country can introduce mandatory insurance. For example, there is no transport tax in Israel, but there is compulsory and additional car insurance required.

In China the government strongly supports buyers of small cars. Taxes on purchases are reduced and interest-free loans are available. This includes a broad promotion of eco-friendly cars in the media. For example, cars with displacement of a liter or less are annually taxed at 300 yuan (about 45 dollars). But this is in Beijing, where traditionally such fees are higher than in other cities. However, the highest annual rate is not so critical — 480 yuan (slightly more than 70 dollars).

In Germany a single transport tax (payments for engine volume and for the volume of CO2 emissions) was introduced in 2009.

In Japan you can get permission to buy a car only after submitting a document on the availability of a parking space (the price is about 1000 dollars for 1 parking space).

Transport tax in Japan is divided into three types:

1) When buying a car — about 5% of its cost;

2) When registering a car, it depends on the mass of your car and its engine volume;

3) Annual payments also depend on the mass and its volume of the engine (approximately 50-500 dollars).

In Australia the transport tax for everybody is 10% of the car’s cost (5% for trucks), plus cars costing more than $57,000 are taxed “for luxury” — 33% of the car’s price.

In Singapore to own a car and to drive it is a very expensive pleasure.

Fearing that an uncontrolled amount of vehicles will lead to traffic jams, the government of Singapore has introduced a number of measures to regulate the ownership and use of cars.

These include a Certificate of Entitlement (COE), a system of transport quotas, road taxes and electronic road charges, as well as mandatory registration of vehicles with the Land Transport Department.

The Certificate of Entitlement, established by the government of Singapore in May 1990, is part of the program to reduce the increase in the number of private vehicles on the country’s roads. The annual increase in the number of cars should not exceed 3%. The Certificate of Entitlement is one of the most controversial and hotly debated public policy documents ever implemented by the government of Singapore, since it is a prohibitive measure.

Anyone who wants to buy a car in Singapore has to compete for the right to buy a car, i.e. to acquire a COE, the monthly number of which is limited.

The scheme for obtaining a COE is as follows:

1. First you need to apply for a Certificate and take part in a lottery for your car category. The are 7 categories, but suitable for citizens are “small”, “medium” and “luxury”.

2. The lottery for a Certificate is held from the 1st to the 7th of each month.

3. You can bid via the Internet or an agent, and pay the bid through most local ATMs.

4. 50% of your bid will be transferred to organizers of the lottery.

5. Each applicant is entitled to only one bid in a lottery. Intruders are excluded from participation in a lottery. This rule does not apply to companies and organizations. For most car categories the Certificate is nontransferable.

6. The winner pays a premium quota. A vehicle without the right to transfer must be registered within 6 months; with the right of a transfer — within 3 months.

The COE allows you to have your own car for 10 years, after which a car is either sent for disposal or sold to another country. There is also a third option — to re-register a COE for the next 5-10 years.

This rule does not apply to certain types of vehicles such as buses, school buses and ambulances.

All cars imported to Singapore are subject to compulsory customs duties at a rate of 31% of the ad valorem value.

There is also a registration fee: $1,000 for private cars and $5,000 for company vehicles.

In addition, during an initial registration of a car (whether new or used) an additional registration fee is charged — 140% of the market value.

This makes the prices of cars very high compared to the the US or Europe.

An electronic road fee is an another attempt to fight traffic jams during rush hours. On some roads, especially in the central part of the city, the system of paid passes has been introduced, and during the rush hour from 8:30 to 9:00 a.m. an increased fee is charged.

So let’s see how much your own car would cost in Singapore.

The total cost of a car: COE + car price + registration fee + road tax + additional registration fee (140% of the price) + customs duty (31% of the price).

Some examples:

1. Audi A4 1.8 — $182,000.

2. BMW 328 — $238,000.

3. Mercedes E200 — $201,902.

4. Volvo 940 Turbo Estate 2,0 — $160,753.

What is the solution? Use public transport or request your company to give you a car as an employee.

When buying a car older than 10 years, pay special attention to the Certificate of Entitlement. It should be issued for 10 years, as a 5-year certificate is not renewed after this period.

Most Singaporean drivers try to get rid of a 10-year-old car rather than resuming a COE for next 10 years. Usually 10-year-old vehicles are sold abroad for spare parts.

Thank you for reading, and don’t forget to apply for an international driving license. It will help you buy and register a car in a new country without additional questions about your national driving permit.
