Anatomy of the Latvian car tax panic story

Last week several Latvian internet portals painted a near catastrophic picture around discussions about a vehicle tax.

Only the rich will be able to afford automobiles, it'll become a privilege for the well-off and a burden for everyone else. The articles attracted a huge amount of angry comments. On social media hundreds of people shared and commented on the articles.

The investigative journalism center "Re:Baltica" has a fact-checking project called “Re:Check”, which investigated the facts behind the panic.

First Article Published

On October 24, the “Neatkarīgā Rīta Avīze” newspaper published an article titled “Paralyzing tax increase planned for cars”. The information source cited in the text is the National Economic and Climate plan. This is an extensive document prepared with leadership from the Ministry of Economics, which indicates the course of action for decreasing environmentally damaging CO² emissions. In the transportation section it does present an option to increase the tax on non-ecological fuel in 2025, as well as the vehicle operation tax for cars using such fuel. The option to implement a first-time vehicle registration tax based on CO² emissions was also presented.

Meanwhile taxes would be decreased for environmentally friendly vehicles.

The document, however, is very general and doesn't even contain approximate rates – not by how much the excise tax would increase, nor how much the registration cost could be. As it doesn't contain numbers, several questions arise for the article author Imants Vīksne: why use such exaggerated descriptions as “paralyzing tax” and “unbearable burden for the poor”?

The Author Explains

“I was trying to bring attention to the issue, and I successfully accomplished this. You're a journalist, you know how headlines are written. It's the absolute essence, the article contains the absolute essence. And I was writing how it would be if this scenario was confirmed,” Vīksne told “Re:Check” Journalist Evita Puriņa.

As Vīksne explains, he noted in the article that the decisions haven't yet been passed. He doesn't hide his opinion: “Yes, I wrote this during the deliberation period. Of course I was creating alarm, because I think that it's a terrible way to treat the Latvian nation, with all this climate ideology.”

Later Vīksne did clarify that he is not against the ideology, but the hidden way in which harmful lobbying of private interests occurs.

Second Article Published

On the same day news portal “Delfi” published an article by the Latvian Automobile Dealers Association, which is even more exaggerated. Government plans threaten to create a situation where two thirds of people won't be able to afford to purchase a private car anymore. This article was based on a different document from the Ministry of Transport, however this one doesn't have any indication either of how large the possible tax increase would be.

“Re:Check” called association Board Member Aldis Čīma. He represents used car dealerships. “The goal of this draft law is to ban the import of more than three-year old cars into Latvia. The issue remains, current cars will be used, people won't be able to afford to lease new or gently used automobiles, they'll have to look for other solutions,” said Čīma.

Fact-Check

It turns out that the document mentioned by Čīma isn't a draft law, but just a draft order on amendments in a broader plan. Most importantly, Saeima has to vote on any changes to taxes. The document also contains no mention of a ban on older cars, it simply uses the term “limit”.

In addition, the Ministry of Transport points out that these proposals are no longer relevant. “After the first round of discussions, proposals from NGOs were taken into account and it was decided to remove the item about implementing a registration tax for vehicles running on fossil fuels out of the plan. The item about limits on three-year old cars, which are being registered for a second time, must also be removed,” says the Ministry's Public Relations Specialist Iveta Kancēna.

Panic on the Radio

Panic was also being created by the other side at the same time. Last week “Latvijas Radio” claimed that as soon as 2021 Latvija may have to pay a 48 million euro fine for too high levels of pollution created by CO² emissions. The only information source - Latvian Auto Association President Andris Kulbergs. He represents mainly new car dealerships and thinks that the problem can be solved by limiting the amount of used cars entering Latvia.

“According to the latest data, in 2030 we're going to have two million more tons of CO² than is allowed by our commitments. So in 2021 we're already going to start paying fines for failure to implement in a timely manner,” says Kulbergs. A few days later Kulbergs mentioned the same issue on the “Krustpunkts” broadcast. Environmental Protection and Regional Development Ministry Representative Raimonds Kašs called this fake news, because nothing has been decided in regards to fines. “There aren't any numbers, not even an idea. It's public deception, plain and simple.”

Afterwards Kulbergs explained to “Re:Check” that he was only talking about the prognosis according to the association's calculations, not facts.

Political Fallout

The responsible Ministries clearly didn't imagine that their tentative plans to raise taxes, even in the distant future, could create such outrage in society.

The excitement, however, has been skilfully used by politicians. “New Unitiy” and “Unity” Leader Arvils Ašeradens announced that the proposal for implementing new taxes is completely unfounded and absurd, “taking into account the reality, especially in the regions of Latvia”. On the other hand, Transport Minister Tālis Linkaits (New Conservative Party) reminded that the Ministry of Economics had already proposed to raise taxes on harmful fuels and vehicles last year. The minister in charge at that time was Ašeradens himself.

Policymakers didn't find it necessary to explain to the public that auto dealers were exaggerating the issue, and that the media were promoting the spread of unchecked facts. They decided instead to try to use it to their advantage.

As a result of this chain reaction at least part of the plans prepared over time by ministries for Latvia to fulfil its climate change-related obligations have been revoked without discussion. Nevertheless, they are worth discussing. Currently transport creates 30% of all greenhouse gas emissions in Latvia. Latvian citizens, just like all other European citizens, must transition to more environmentally friendly automobiles, and transition to a greater use of public transport over private vehicles. Or we have to pay.

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