Tax on older vehicles to be implemented in Latvia

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Government decided last week to impose a one-off tax for purchase of old vehicles starting next year, Latvian Television reported October 3.

The initiative regarding the introduction of vehicle registration tax has come from the Ministry of Transport, with a view to prevent the registration of old and environmentally harmful passenger cars in Latvia. According to Transport Minister Talis Linkaits (New Conservative Party) – Western countries have already taken a variety of measures along similar lines.

“We wouldn't want all this flow of cheap but environmentally damaging vehicles to come into Latvia. Therefore, an additional registration tax is introduced in Latvia,” Linkaits pointed out.

The tax rate will be calculated depending on the age of the car, the fuel type and the amount of carbon dioxide (CO2) produced. Therefore, the amount payable can vary considerably. Vehicles under the age of five will not be subject to registration tax.

Such amendments are strongly opposed by the association of car dealers, indicating that this will penalize the poorest people who cannot afford to buy expensive new cars.

“The bad news is that this tax is based on the principle that the less-wealthy pay more for mobility,” said Jānis Ozoliņš, executive director of the Transport Traders Association.

With the new registration tax, the government hopes to replenish the national budget by around €15 million per year.

Car dealers warn that the effect is likely to be the opposite, as more and more Latvian drivers will choose to register cars in neighboring countries and pay taxes there.

“We look at Estonia in comparison. There is a cost of registering a new vehicle at €180-190, plus €40 every two years for roadworthiness. Lithuania has €50-60. In our country, it's in the hundreds. And we still want to implement a new tax,” said co-owner of the auto store, Vilmārs Millers.

The buyers of used vehicles LTV met at traders said they would like to choose a new and more environmentally friendly car, but they simply could not afford it.

“If I had support, I would buy a new car, at least with a hybrid motor. Or even a green car that only goes on batteries,” said buyer Rustams.

However, the Latvian government does not plan any measures to aid the purchase of more environmentally friendly cars. According to the Ministry of Transport, this is not possible because Latvia does not have local car production, and it would not be right to subsidize the purchase of cars manufactured in other countries from the State budget.

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