Mazda chief says CO2-based tax policy 'lacked discipline'

RECENT MOVES by European governments, including Ireland, towards taxing vehicles on their carbon dioxide (CO2) emissions has been criticised as "political opportunism" by the chief executive of Mazda Europe.

James Muir said the policies being adopted by EU governments lacked discipline and co-ordination and ultimately attempted to gain public approval without proper deliberation.

"I don't see much discipline in the application of these taxes. Instead, what I see is political opportunism," he said.

While accepting that it is for various states to decide the financial rates they impose, "some countries have opted for a linear approach depending on the CO2 emissions of a vehicle, while others - like Ireland - have opted for bands". The range of each band and number of them also differs between states.

Tax on new cars sold in Ireland is set to change from July 1st into a seven-band CO2 emissions-based tax, instead of the current system based on engine size. Annual road tax on cars is also changing to an emissions-based system.

Britain also has a seven-band CO2 system, but the emission levels for the bands differ from those in Ireland. France introduced a scheme in January whereby vehicles which emit more than 160g/km of carbon dioxide will be charged a tax ranging from €200 up to a maximum of €2,600.

Cleaner cars that put out less than 130g/km will get €200 back, with rebates increasing to a maximum of €1,000.

Mr Muir says that given the industrial constraints on the car industry to change production and product range, the unco-ordinated approach being taken by various European governments is "not entirely responsible".

The problem for the car industry is that it can concentrate engineering efforts to get cars into line with new bands and follow consumer demands to reduce emissions, but if the bands differ between states, the industry is ultimately forced to concentrate efforts on getting its model range in line with the tax criteria for larger markets such as Germany and Britain. That means smaller markets will lose out.

"It has a terrible impact on dealers, from all companies, and it should be remembered that the local car industry employs a lot of people. This is a cash intensive business, and if you suddenly dry up the market for some cars, or introduce confusion to the marketplace, how do you expect dealers to run their businesses?

"I would like to see a little more deliberation going into legislation and tax decisions in this area and some co-ordination at a European level." While critical of "opportunistic" government responses to the environment debate, he says it has galvanised the industry and forced it to change, leading to rapid innovation and altering the balance of power. "It's an exciting time and the old order of the market is being checked."