Company car privilege unfair and harmful to the climate – use budget negotiations for reform

2023-06-26 10:19:45

The study suggests ways to reduce the tax benefits for combustion engines and to focus support on small electric models.

Only the highest income ten percent benefit

According to the study, the state subsidizes the sale of expensive and CO2-intensive combustion cars with up to 5.5 billion euros annually. The highest-income ten percent of the population with more than 80,000 euros gross annual salary will benefit from this for the most part. The study examines several reform options with which the company car privilege can be made fairer and more climate-friendly. The central proposal is CO2-dependent taxation: it would mean that climate-damaging combustion engines are no longer worthwhile as company cars and that small and cheaper e-cars would be promoted more. This also favors a used car market for e-cars.

“Taxation of company cars is no longer up-to-date”

“The current company car tax is no longer up-to-date and is slowing down the necessary turnaround in mobility. We propose restructuring the company car privilege in such a way that small e-cars in particular are promoted. This makes sense from an industrial policy perspective, makes a contribution to meeting climate targets and creates important budgetary benefits Scope for investments in climate protection and social security In the upcoming budget negotiations, Finance Minister Lindner and Transport Minister Wissing are required to use the savings potential of climate-damaging subsidies, as agreed in the coalition agreement,” explains Stefanie Langkamp, ​​Political Director of Climate Alliance Germany.

“Company car tax acts like a flat rate for combustion engines”

Viviane Raddatz, head of the climate and energy department at WWF Germany, says: “The company car tax is currently acting like a flat rate for combustion engines. It favors particularly expensive and emission-intensive cars and thus creates the wrong incentives to bring the transport sector in line with the climate goals Instead of better tax treatment for expensive gas guzzlers, CO2-dependent taxation should be introduced and subsidies should be geared towards small electric cars really to be able to achieve. In the forthcoming cabinet decision on the federal budget, the federal government must show how it uses public spending efficiently and aligns it with its climate goals. The company car privilege in its current form is not one of them.”

“Reduction of the subsidy is urgently overdue”

Eva Maria Welskop-Deffaa, President of the German Caritas Association, explains: “In the toolbox of a socially just climate policy, tax policy needs special attention. The current company car tax creates considerable misguided incentives for the use of fossil dinosaurs and it almost exclusively favors high-income sections of the population. A reduction in this subsidy is therefore urgently overdue – for a tax policy that is socially balanced and ecologically sustainable at the same time. Such a tax policy must treat company cars for outpatient care services, mostly small electric cars, differently and better than heavy petrol engines, which are used privately as company cars by managers in commercial enterprises .”