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Luxembourg Seeks 'Intelligent' Tax To Cut Emissions

by Ulrika Lomas, Lowtax.net, Brussels
05 February, 2014

Luxembourg's Transport Minister François Bausch has revealed that the Government is currently in talks with car associations in the Grand Duchy, to identify an "intelligent" fiscal solution to the challenge of dramatically reducing car emissions.

While making clear that the Government does not intend to implement any "selective" tax rises, ahead of a planned reform of taxation in 2016, Transport Minister Bausch nevertheless announced that preparations are already underway to tackle the issue of the taxation of cars and company cars. The Government is in dialogue with the Association of Luxembourg Automobile Distributors (ADAL) as well as with the Federation of Luxembourg Garages (Fegarlux), the Minister noted.

Pointing out that Environment Minister Carole Dieschbourg is to present the latest nitrogen oxide statistics shortly, Bausch warned that the figures are "catastrophic." The results not only have health implications, but could also have financial implications for the state, Transport Minister Bausch maintained, alluding to the fact that emissions levels in Luxembourg are currently in excess of the European limits to be adhered to by 2015. To reduce emissions, the Government must focus its efforts not only on public transport, but also on the share of diesel-powered cars in its national fleet, he explained.

According to Bausch, the Luxembourg car association Automobile Club recently advocated that the country's car tax be adjusted in future to take into account both the average fuel consumption level of a car and the distance traveled over the course of a year. This would be "the most intelligent solution." Transport Minister Bausche emphasized that instead of raising fuel prices, motorists would be fiscally penalized or rewarded depending on car use and carbon dioxide emissions.

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