Ministries have received the first feedback to proposed car tax draft legislation. Organizations want state-owned vehicles exempt and are critical of more lenient conditions for EVs.
The Rescue Board sent its proposals to the Ministry of Internal Affairs and recommends not taxing vehicles used by state agencies.
"Taxing state authorities' vehicles would simply amount to moving expenses from one line to another in the budget. This kind of redistribution serves no functional purpose and constitutes an administrative burden," Andreas Anvelt, deputy chief of the Rescue Board, wrote in his letter to the ministry.
The Estonian Motor Insurance Bureau (LKF) recommended opting for tax model A where the tax amount would be calculated based on a vehicle's environmental impact when it is manufactured, throughout its lifetime and when it is reclaimed.
At the same time, the one-off registration fee should follow model B that concentrates on the vehicle's CO2 emissions, which would help prevent import of older and more polluting vehicles.
"When it comes to model B, we would point out that while EVs have a lower emissions footprint, the experience of Norway, that has the highest relative number of EVs, suggests they are 30 percent more likely to suffer damage in traffic," LKF head Mart Jesse wrote.
He said that while statistics exist for Estonia, the tiny sample means Norway's experience should be considered.
"It costs on average 20-30 percent more to repair an EV that has been in an accident, which is why these vehicles cost more to insure.
Andreas Anvelt from the Rescue Board said it should be made clear whether the tax will target owners or vehicles. Because the Rescue Board switches out roughly 40 vehicles every year, this could constitute double taxation of owners," he said.
The Rescue Board also wants to know how the government plans to measure the effectiveness of the new tax. Anvelt said that looking only at the number, age and CO2 emissions of registered vehicles, if so-called phantom cars that may no longer even exist are removed from the register, the base used to calculate the tax would change.
Phantom cars and museum showpieces a concern
Mart Jesse wrote that EU law obligates owners to take their vehicles to scrap yards after their useful lifespan, while this is simply not done in Estonia because there is no car tax. This has led to inaccurate data in the traffic register.
"Registered owners of vehicles are often oblivious of the fact after the acquirer fails to register the vehicle in their name following a transfer (for instance when vehicles are acquired for the purposes of stripping them for parts). That is why there is reason to believe that a large part of around 300,000 vehicles with suspended register entries do not physically exist, with the register entry the only tangible evidence left," Jesse said.
The Estonian Motor Insurance Bureau has proposed deleting all vehicles with suspended register entries, leaving the owners of the few such vehicles that do exist the possibility of reregistering them.
The Rescue Board also pointed to museum pieces the taxation of which should be revised. While such vehicles have been entered into the traffic register, they do not take part in actual traffic.
"We have reason to believe that a car tax would lead to an increase in the number of cars that do not have insurance. Because it creates motivation to temporarily delete vehicles from the register or use cars with foreign license plates in Estonia, an automatic control system could be considered.
According to Jesse, an automatic control system would help ensure effective tax collection and supervision of registration, motor insurance and technical inspection.
Editor: Marcus Turovski