Tax on old vehicle purchase considered in Latvia

Latvia is planning to implement a one-off tax for purchasing older vehicles, head of the European vehicle database, autoDNA.lv, Agris Dulēvičs, told Latvian Radio August 30.

In the European Union, the average car age is 10-11 years, while in Latvia it is three years older than that. In order to facilitate the updating of the Latvian car situation, it is envisaged to introduce a one-off tax for purchasing a vehicle older than five years. The amount of the tax hasn't yet been determined.

The head of the European vehicle database, autoDNA.lv, Agris Dulēvičs, said that after a two-month drop in the spring, used car registrations returned to their normal levels in July. Registration and import of used vehicles fell sharply during the crisis, but in Latvia it was only two months. There are still restrictions on movement in other countries, but the situation is rather good in Latvia.

According to data from the car database, an average of 15-year-old cars are purchased in Latvia, and 14-year-old in Estonia. Most popular are BMW, Audi, Volvo, Volkswagen. The average purchase price is €5000-6000. 

As early as February, representatives of the Ministry of Transport (SM) called for a one-off additional tax to be introduced in Latvia, which will have to be paid when registering a 5-year-old car. Tālivaldis Vectirāns, Director of the Auto-traffic Department of the SM, said that car buyers often purchase old vehicles that are already threatening traffic safety. We also need to think about reducing the amount of harmful emissions.

The old cars are built on old technologies, are technically not up-to-date and the replacement of parts that affect emissions, such as soot filter, high pressure pumps repair and regulation, can cost half the purchase price of the car. Of course, CO2 emissions are much higher.

In Lithuania, for example, an additional tax was introduced on 1 July 2020. If the amount of CO2 in the exhaust gas is high, the additional amount should be paid up to EUR 180. The SM's offer is to pay in addition to the registration so that it could influence the decision on the purchase of a car.

Vectirāns stressed that the policy of many European countries is to reduce the number of old, especially diesel-powered cars on the roads, by replacing them with newer and more environmentally friendly cars.

Of course, an additional tax, albeit one-off, will lead to additional costs for car owners.

The discussion will continue when the planned changes to the tax bill are approved by the Cabinet.

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Economy
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