Estonia: Finance Ministry proposes two models for new car tax

Estonia’s Finance Ministry has proposed two alternative models for a motor vehicle tax, BNS reports. Under the first model, the tax would be based on the environmental impact of the motor vehicle over its entire life cycle, including manufacture, use, and disposal. Under the second model, the tax would be based on the amount of CO2 emissions during use. The tax would be levied on all motor vehicles weighing up to 3.5 tonnes and would apply to each vehicle separately. The tax would be lower on older cars so as to encourage longer use of vehicles and make cars more affordable, ERR reports. The Finance Ministry estimates that the tax would bring in about EUR 120mn of revenue in the first year. Under the plan, the tax would take effect as of 1 July 2024. Currently, Estonia has no car tax of any kind.

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