It has turned out to be a brilliant and easy-to-read piece of prose: “The Car Letter II’, no less than 12 pages long, which State Secretary for Finance Wiebes sent to the House of Representatives on 19 June 2015. He begins by setting the record straight: “The primary purpose of vehicle taxes is to finance public expenditure“. This is followed by a detailed explanation of how justified the use of car taxes for non-fiscal incentives has been, and will continue to be in a modified form in the future. The entire package is budget-neutral within the automotive sector. In other words: the total revenue from the Netherlands’ cash cow will remain unchanged even after all these measures have been implemented.
Wiebes then went on to discuss the European energy mix policy, to which the Netherlands has added a national “overlay”. It is precisely this national overlay that has led to the waterbed effect. In other words, semi-electric cars have been over-subsidised in recent years (the national overlay), and this has meant that this plug-in hybrid car has grown from a young adult into a fully-fledged adult. To quote the State Secretary: “If we carry on greening things up at this rate, the parking spaces will soon be too small!“.
Research by TNO shows that, in practice, plug-in vehicles travel far fewer kilometres on electric power than is assumed in the vehicle’s type-approval calculations. With an electric range of 25 km, real-world emissions are 50% higher than those stated in the type approval; with a range of 75 km, they are no less than 200% higher. According to Wiebes, increasing the proportion of electric kilometres through tax incentives is not working. Another quote: “The inspector doesn’t pop round at night to check whether the plugs are properly plugged in“.
Drivers of plug-in hybrid cars are starting to sense that the writing is on the wall: the tax incentives for their cars are set to be phased out. From 2018, the Government will be fully committed to completely zero-emission cars. These are primarily cars that are powered entirely by electricity (with or without hydrogen). The ambition remains that, after 2035, only zero-emission cars will be sold and that, after 2050, all driving will be zero-emission.
Drivers of older diesel vans and cars must pay an additional tax to help fund the promotion of zero-emission driving.
From 2019 onwards, only two rates will be applied for the additional tax liability under payroll and income tax. For a zero-emission car, this is 4% (but this lower rate applies only up to a list price of €50,000). For all other cars and the portion of the list price of zero-emission cars exceeding €50,000: 22%. The years 2016 to 2018 inclusive will be used to arrive at these additional tax liability rates in a few stages.
Zero-emission vehicles also remain exempt from the BPM (tax on passenger cars and motorcycles) and MRB (motor vehicle tax). The MRB is being reduced across the board by 2%. A surcharge will be introduced only for older diesel vehicles. The BPM will be reduced in stages by 12% until 2020 (based on the current estimate of BPM revenue).