Road tax, known by various names around the world, is a tax which has to be paid on, or included with, a motorised vehicle to use it on a public road.
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Road tax, known by various names around the world, is a tax which has to be paid on, or included with, a motorised vehicle to use it on a public road.
All states and territories require an annual vehicle registration fee to be paid in order to use a vehicle on public roads; the cost of which varies from state to state and is dependent on the type of vehicle. The fee is known colloquially as 'rego' (pronounced with a soft g, short for registration).[1] Queensland road tax is based on the number of cylinders or rotors the vehicle's engine has. There is also a small traffic improvement fee. New South Wales road tax is paid based on the vehicle's tare weight.
Passenger cars pay a registration fee based on the engine displacement and power output (degressive towards 2014 (66% in 2012, 33% in 2013, 0% in 2014) and environmental criteria such as CO2 g/km output (increasingly towards 2014). The more CO2 g/km the car produces, the higher the fee will be.[2]
Every year, the plate number owner has to pay the annual road tax contribution. This tax is based on the engine displacement (0-799cc = fiscal HP 4, above 800cc each 200cc is one class higher).[3] Due to CO2-based regulations, diesel cars with above average displacement (>2,000cc) are favoured, and petrol cars with bigger displacements are put at a disadvantage). A supplementary annual fee has to be paid for cars that run on LPG/CNG (0-799cc: €84/year, 800–2,499cc; €148/year and >2,500cc: €208/year) to compensate financial loss for the state due to the absence of excise at the pump.
In Brazil, the states may collect an annual Vehicle Licensing Fee (Taxa de Licenciamento Veicular) which has a fixed value for each vehicle category determined by each state. In addition, each state may impose a Vehicle Property Tax (Imposto sobre a Propriedade de Veículos Automotores), with a rate up to 4%.[4]
The Costa Rican car property tax, commonly referred to as Marchamo, is among the highest in Latin America, with rates that can go up to 3.5% of the fiscal value of the vehicle yearly. When compared to the Costa Rican minimum wage (₡331,516.22 a month, equivalent to US$597.33), the tax on an average US$15,000 (₡8,600,000) car can be ₡302,000 (US$525), or 80% to 120% of a month's pay. Even though Costa Ricans receive a yearly bonus equivalent to a month's salary, the property tax negates this for most car owners, which has led to calls for tax law reform.
Opponents to the car property tax argue that common cars already pay 100% tariff when imported, meaning that a car in Costa Rica is twice as expensive as in the country of origin. Additionally, gas refills include 65% fuel tax. Owning a car that would cost US$7,500 to purchase (in the United States) for seven years can result in the owner paying up to US$29,595 in total taxes (around US$4,227.85 a year). The Ministry of Finance also has the right to step up the fiscal value of a car, effectively a negative depreciation.[5][6]
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See also: Tax horsepower § France |
In France, the vignette was abolished for private vehicles in 2001 and was replaced by a tax on toll-road operators[7] at a rate of €6.85 per 1,000 kilometres travelled. In addition, a tax is levied on vehicles registered to companies. Since 2006, the tax is levied according to CO2 emissions ranging from €2 per gramme to €19 per gramme.
In Germany, the Motor Vehicle tax (Kraftfahrzeugsteuer) is an annual tax on all vehicles. It ranges from €5 per 100cc to €25 per 100cc for petrol engines and €13 to €37 for diesel engines.[8] Vehicles first registered before June 30, 2009 are taxed according to engine displacement and national/European emission class, whereas vehicles which were registered after that date are taxed solely based on CO2 emission in grams per km (g CO2/km). An on-line tax calculator has been made available.[9] The CO2 Price ist up to 4 Euros per gram.[10]
In Hong Kong, the licence fee is according to the category (passenger cars, goods vehicles, taxis, etc.) of the vehicle first. Then, for passenger cars (known as private cars), it is calculated by the engine size. The lowest tax band is under 1500 cc, then the tax band changes at 2500 cc, 3500 cc and 4500 cc. Due to this system of license fee, most of 1600 cc to 1800 cc car models do not sell well. Most people prefer 1500 cc for compact cars. Due to this reason, some manufacturers provide only the 1500 cc version of their compact cars to Hong Kong market such as Toyota Corolla and Nissan Tiida. Both of these two cars only have 1500 cc version available.
By engine displacement:
In Hungary, since 2009, this tax is based on the vehicle's engine performance and the vehicle's age. Before this so-called performance tax, this tax was based on the vehicle's weight and unofficially it was called a weight tax.[citation needed]
In India, road tax is imposed by the respective state governments (lifetime and also annual for commercial vehicles) also, further there could be toll for specific usage of roads (charge depends on distance, type, etc.). At the time of purchase of the vehicle, the government levies GST (Goods & Services Tax) at the rate of 28% and additional cess is levied based on the cubic capacity of the engine of the vehicle(1% for small cars with CC< 1200 CC, 3% for CC between 1200 and 1500 CC, 15% for above 1500 CC). Electric cars are levied lower tax of 5%.
The motor vehicles tax (called road tax) is calculated on the basis of various factors including engine capacity, seating capacity, unladen weight and cost price. Each state has different rules and regulations for charging the road tax.
There is proposal to have uniform rules and also tariffs across the country in line with the government's initiative of having "One Nation-One Tax".
In these days, in India there is a movement called "Digital India" in which every type of work related to every department is getting digitalized and "Ministry of Road Transport & Highways" has created a portal called "Vahan" for online road tax payment to ease the pain of paying of taxes to the government in offline mode. It is a very smooth experience to pay such taxes from home and saving time.[11]
Vehicle registration tax applies to all new car registrations as well as imports. VRT for private cars is based on CO2 emissions as well as NOx emissions.[12]
Motor tax is payable as an annual duty (subject to exemptions) in Ireland. Prior to 2008, the annual tax levy was based on the engine size, and was ranging from €199 pa for <1,000 cc to €1,809 for >3,001 cc. Private cars registered after July 2008 are taxed at the tax rates based on the vehicle's carbon dioxide emissions. The tax bands for CO2 emissions range from €120 pa for 0-80 g/km to €2,350 pa for >225 g/km. Commercial vehicle tax is based on GVW, regardless of engine size or CO2 emissions, and range from €333 to €900 pa. Vintage vehicles are taxed at €56 pa; a vehicle is considered vintage 30 years after the date of its first registration.[13]
Combustion engine cars base purchase tax is 83% plus 7% customs tax for manufacturers from countries with no treaty with Israel plus VAT of 17% and optional "prestige tax" of 2.9% to 18% for high cost cars. This brings total tax on a new car to around 100%. Hybrid engine cars base tax is 45%, and electric cars base tax is 10%. "How come Tesla is so cheap".
As of 2023, road taxes in Italy are classified by tax horsepower and European emission standards.[14]
A tax is collected under the Local Tax Act of 1950 that is paid every May based on the vehicle's engine's displacement. The tax is then determined by whether the vehicle is for business or personal use. Brackets are determined based on exterior dimensions and engine displacement as defined under the dimension regulations. The tax to be paid is then based on the engine's displacement starting with engines below 1,000 cc, and increasing at 500 cc intervals to a top bracket of 6,000 cc and above.[15][16][17]
Personal vehicles pay more than vehicles identified as business use. If the car has been certified as a low-emissions vehicle, under the Japanese low-emission vehicle certification system, the tax obligation is reduced. Kei cars (Japanese vehicles with 660 cc engines and reduced exterior dimensions) have significant tax advantages because their tax is about a quarter of that of a 1,000 cc car.
The legislation is similar to a European approach to taxing engine horsepower, while the Japanese approach taxes engine displacement.
Light Motor Vehicle Tax
On 31 May 1971 until 31 March 2010, the Japanese government passed a law creating the Automobile Weight Tax (in Japanese). It was modified on 31 March 2010, and the next day, on 1 April 2010. The tax is paid every year in conjunction with the engine displacement based road tax. The weight determination is made in tonnes.
| Vehicle class | Tax amount |
|---|---|
| motorcycle | ¥1,500 |
| kei car | ¥2,500 |
| passenger car | ¥5,000 per tonne |
| truck | ¥2,500 per tonne |
As of 1 April 2010, the tax requirements are as follows. The determination of whether the vehicle is for business or personal use has been added, similar to the engine displacement regulations:
| Vehicle class | Personal use | Business use |
|---|---|---|
| motorcycle | ¥2,200 | ¥1,600 |
| kei car (125~250cc) | ¥5,500 | ¥4,300 |
| new kei car | ¥11,300 | ¥8,100 |
| renewal kei car | ¥3,800 | ¥2,700 |
| passenger car | ¥10,000 per tonne | ¥5,400 per tonne |
| truck (commercial vehicle) | ¥3,800 per tonne | ¥5,400 per tonne |
| bus | ¥5,000 per tonne | ¥2,700 per tonne |
| Vehicle class | Personal use | Business use |
|---|---|---|
| motorcycle | ¥2,500 | ¥1,700 |
| kei two wheel(126~250cc) | ¥6,300 | ¥4,500 |
| new kei car | ¥13,200 | ¥8,400 |
| renewal kei car | ¥4,400 | ¥2,800 |
| passenger car | ¥12,600 per tonne | ¥5,600 per tonne |
| truck (commercial vehicle) | ¥4,400 per tonne | ¥2,800 per tonne |
| bus | ¥6,300 per tonne | ¥2,800 per tonne |
The following is the tax rates for passenger vehicles used for both personal and business use, incremented by 500 cc engine displacement.[18]
| Total displacement | Personal use | Business use |
|---|---|---|
| under 1-litre | ¥29,500 | ¥7,500 |
| 1-litre–1.5-litres | ¥34,500 | ¥8,500 |
| 1.5-litres–2.0-litres | ¥39,500 | ¥9,500 |
| 2.0-litres–2.5-litres | ¥45,000 | ¥13,800 |
| 2.5-litres–3.0-litres | ¥51,000 | ¥15,700 |
| 3.0-litres–3.5-litres | ¥58,000 | ¥17,900 |
| 3.5-litres–4.0-litres | ¥66,500 | ¥20,500 |
| 4.0-litres-4.5-litres | ¥76,500 | ¥23,600 |
| 4.5-litres–6.0-litres | ¥88,000 | ¥27,200 |
| over 6-litres | ¥111,000 | ¥40,700 |
The following table is the tax bracket for lorries or vehicles built with a load carrying section without seats and a single bench seat in the front of the vehicle in an enclosed passenger compartment.
| Load capacity | Personal use | Business use |
|---|---|---|
| under 1 tonne | ¥8,000 | ¥6,500 |
| 1 ton - under 2 tonnes | ¥11,500 | ¥9,500 |
| 2 tons - under 3 tonnes | ¥16,000 | ¥12,000 |
| 3 tons - under 4 tonn3s | ¥20,500 | ¥15,000 |
| 4 tons - under 5 tonnes | ¥25,500 | ¥18,500 |
| 5 tons - under 6 tonnes | ¥30,000 | ¥22,000 |
| 6 tons - under 7 tones | ¥35,000 | ¥25,500 |
| 7 tons - under 8 tonnes | ¥40,500 | ¥29,500 |
| over 8 tonnes | ¥40,500 + ¥6,300 for each additional tonne | ¥29,500 + ¥4,700 for each additional tonne |
The following table is the tax bracket for buses, or vehicles designed to carry many passengers.
| Load capacity | Personal use | Business use |
|---|---|---|
| 30 or less | ¥33,000 | ¥12,000 |
| under 40 | ¥41,000 | ¥14,500 |
| under 50 | ¥49,000 | ¥17,500 |
| under 60 | ¥57,000 | ¥20,000 |
| under 70 | ¥65,500 | ¥22,500 |
| under 80 | ¥74,000 | ¥25,500 |
| 80 and over | ¥83,000 | ¥29,000 |
The vehicle operating tax on cars first registered after January 1, 2005 that have registration certificates with information on total weight, engine volume and engine maximum power, shall be paid by summing up tax rates according to total weight, engine volume and engine maximum power of the car as follows:
An annual tax is applied to each vehicle. In 2013, as an example, the annual tax for a BMW 330D 2004 model was €224.
In Malaysia, the latest road tax information and calculations is different in East Malaysia and West Malaysia, which the former in general has lower rate than the latter because of the poor geographical condition and road surface. Besides, within both the two areas, the tax amount also varies according to car variants as well as engine capacity.
Private cars are classified as ‘saloon’ vehicles such as hatchbacks, convertibles and sedans, whose road tax rate is different from non-saloon vehicles such as MPV, SUV or pickup trucks.
Also, "company-registered saloon" will have to pay higher tax than the "private-registered saloon" for the same engine displacement. Which does not applied to 'non-saloon'.
Until 2011, the federal government charged an annual vehicle tax, Tenencia Vehicular, depending on the value and other vehicle characteristics. Although the tax was federal, the states collected the tax. This tax was created in 1961 and in 2006 represented about 1.6% of the total tax income (around 13 billion pesos).[19]
In 2012, vehicle tax became a state matter with some states charging the tax, others charging a partial tax (mostly on cars above a certain value) and others such as Morelos and Querétaro, charging no tax.
In the Netherlands, a tax is applied to the vehicle based on its weight and fuel type, and the region.[20] Electric vehicles and classic cars over forty years old are exempt from road tax.
In Nepal, vehicle tax is collected by Transport Management Offices and Transport Management Service Offices.[21] These offices come under Province governments. Hence vehicle tax is charged in different provinces in different rates. However, the basic criteria are set by federal law, which is same for all provinces. Owner has to pay tax in every fiscal year as per the rates determined in fiscal act passed by Province Assembly for that fiscal year. The owner has to pay tax before the renewal date or April 15 of every fiscal year, whichever comes first. There is no penalty for paying tax within 3 months after deadline. Then, 5% fine is applied within one month, 10% for subsequent one and half month, then 20% for the fiscal year and 32% after the fiscal year. Vehicle tax rate is dependent on displacement capacity (cc) of engine, Vehicle type (private or government or rented or corporates or tourist use) and size of vehicle (Motorcycle, Car, Jeep, delivery Van and so on.)
Income tax is also collected from vehicle registered for rent every year. The rate is determined by Income Tax Act. Vehicle Registration fee, renew fee, vehicle fitness test fee, pollution test fee, route permit fee and other applicable fees are also collected as per the vehicle and transport management act of related provinces.
In New Zealand, passenger cars are taxed not by weight, but by a time-based period of between 3 and 12 months.[22]
Diesel vehicles pay road user charges (RUC) by mileage travelled and tonnage.[23]
Additionally, a Clean Car Discount is levied on high fuel consumption vehicles, nicknamed a "ute tax", to cross-subsidise electric and fuel-efficient vehicles.[24]
In Norway, a one-off registration tax must be paid upon initial registration of any motor vehicle in Norway. The fee is calculated according to the vehicle's tax group, kerb weight, emissions (CO2 and NOx) and engine volume.[25]
Historically, cars in Norway were taxed annually according to an annual motor vehicle tax stipulated by the Norwegian Tax Administration according to the vehicle's type and weight class. The annual motor vehicle tax was replaced by the road traffic insurance tax which came into effect on 1 January 2018 and is paid through the yearly compulsory liability insurance for motor vehicles.[26][27]
While commonly referred to as a "veiavgift" ("road tax"), no road tax has ever existed in Norway.
| Vehicle type | NOK per day |
|---|---|
| Car w/ weight below 7500 kg | 8,12 |
| Car w/ weight below 7500 kg, diesel engine without factory installed particle filter | 9,47 |
| Motorcycle | 5,65 |
| Veteran, moped, tractor, taxi (registered), and others | 1,31 |
In Romania, every owner that owns a registered vehicle owes a yearly property tax, 'Impozit', on that vehicle which is mainly based on the engine's Cubic capacity for passenger cars and buses. Regarding Trucks and Semi-trailer trucks, it is also affected by the number of Axles.
Although the template for the collection of vehicle property tax depending on the vehicle's type is drafted by the national government, the property tax is owed to the local government in which the vehicle is currently registered and the local council can vote to reduce or to increase the tax owed by a margin (for example, in the year 2018, the local council of the Municipality of Timișoara voted to increase the owed vehicle property tax by 50%, effectively making it the highest in the country)
The framework for calculating the basic vehicle property tax is the following:[28]
| I. Vehicles Registered Nationally (almost all vehicles fit into this category) | Amount owed in RON per each 200 cc | |
|---|---|---|
| 1. | Motorcycles, three-wheeled vehicles, quadracycles, and regular vehicles with a cubic capacity < 1600 cc | 8 |
| 2. | Motorcycles, three-wheeled vehicles, quadracycles with a cubic
capacity >= 1600 cc |
9 |
| 3. | Regular vehicles with a cubic capacity between 1601 cc and 2000 cc | 18 |
| 4. | Regular vehicles with a cubic capacity between 2001 cc and 2600 cc | 72 |
| 5. | Regular vehicles with a cubic capacity between 2601 cc and 3000 cc | 144 |
| 6. | Regular vehicles with a cubic capacity >= 3001 cc | 290 |
| 7. | Buses and minibuses | 24 |
| 8. | Other mechanically powered vehicles having a Maximum Authorized Mass not exceeding 12 tons. (Utility Vehicles, mainly small vehicles designed to also transport goods like pickup trucks, small platform trucks and others which don't fit the definition of a regular vehicle) | 30 |
| 9. | Tractors | 18 |
| II. Vehicles Registered with the Local Commune (mainly farming vehicles, these vehicles cannot travel outside the commune limits) | Amount owed in RON per each 200 cc | |
| 1. | Vehicles with a cubic capacity <= 4800 cc | 2 - 4 |
| 2. | Vehicles with a cubic capacity >= 4801 cc | 4 - 6 |
| 3. | Vehicles for which the cubic capacity is not known or specified | 50 - 150 RON/year |
For example: The owner of a normal gasoline-powered vehicle with an engine of 2000 cc, registered in the mun. of Cluj-Napoca (where there is a 0% markup) will have to pay a yearly vehicle property tax of 180 RON. (Rate: 18 RON/200cc, 2000 / 200 = 10, 18 * 10 = 180 RON). Meanwhile, someone who lives in the Mun. of Timișoara and owns a vehicle that has the same capacity will pay 274 RON (Timișoara has a 50% markup).
Another example of a vehicle with a cubic capacity of 3000, registered in Alba county, which has a 16.05% markup: Rate: 144 RON/200cc, 3000 / 200 = 15. Normal Tax owed: 15* 144 = 2160. Tax owed in Alba county (16.05% markup): 2160 * 116.05/100 ~= 2507 RON.
This system of taxation results in incredibly high taxes for vehicles with engines bigger than 3000 cc (Upwards of 6000 RON per year), and low taxes for engines smaller than 2000 cc. As a result, many people have tried to dodge the system either by registering their vehicles in another EU country with smaller taxes, or by converting their vehicles to fit the legal definition of a Utility Vehicle, which is included in category 8 and have a rate of only 30 RON / 200cc instead of 290 RON / 200cc. For example, the owner of a vehicle that has a cubic capacity of 4000 cc will have to pay 5800 RON per year, compared to 480 RON per year owed by someone who owns a pickup truck (also a Utility Vehicle) with the same cubic capacity of 4000. The main legal requirement for a vehicle to be considered a Utility Vehicle is that it must have a cargo area that is separated from the passengers and cannot be accessed from within the vehicle. Many passenger cars (especially SUVs) can easily be modified to fit this requirement by installing a barrier between the trunk area and the back seats.
Hybrid vehicles owners will pay a reduced tax (50% to 100% reduction). Electric vehicle and Classic car owners will pay no tax at all. All vehicle owners get a 10% reduction if they pay the tax before May 1 (which is the deadline for paying the vehicle tax). Physically impaired people and war veterans do not owe any vehicle property tax no matter the vehicle type.[29]
On top of paying an annual Vehicle Property Tax, all vehicles that travel outside of city limits must pay the "Rovinieta", including internationally registered vehicles that travel temporarily on Romanian roads which ranges from 28 Euros a year for passenger cars to 1210 Euros for Trucks that have a Maximum Authorized Mass greater than 12 t and more than 4 axles. Classic cars are exempt from the Rovinieta.
In Spain two taxes apply to motor vehicles:
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Main article: Vehicle Excise Duty |
In the United Kingdom it is a requirement to pay Vehicle Excise Duty (VED), which is paid annually to the government for a vehicle licence.[32] Previously, vehicle licences in the form of paper discs were required to be displayed on vehicles, and this licence would remain valid until its expiry date even if the vehicle was transferred to another keeper. The paper discs were abolished in October 2014, meaning that the licence is merely an entry in the centralized database; moreover, following this change the licence is cancelled if the vehicle is transferred.[33] Vehicles that are not used or kept on public roads must be the subject of a Statutory Off-Road Notification (SORN) if they are unlicensed.[34]
In 1937, the direct relationship that existed between the tax and government expenditure on public roads was cut, the proceeds being treated as general taxation.[35] In the 2015 budget, the government announced that the revenue would once again be used directly to maintain the roads, for the first time since 1937.[36] In the 2018 budget, the government announced a National Roads Fund which would ring-fence VED in England for the improvement of roads.[37]
Each state requires an annual registration fee which varies from state to state.[38]
Additionally, in some states, counties and/or municipalities are allowed to also impose a vehicle tax. For example, in Illinois, Cook County taxes vehicles that are registered in unincorporated areas, and a number of municipalities have their own annual vehicle registration fee.[which?][citation needed] In Massachusetts, the excise tax is billed separately from registration fees, by the town or city in which the vehicle is registered, and was set at a fixed rate of 2.5% statewide by a 1980 law called Proposition 2½. Within some states, the fees may vary from county to county, as some counties have surcharges per vehicle; an example of this is Virginia's personal property tax.[citation needed] New York State, on the other hand, charges a tax based on the vehicle's weight, rather than on its value, which is charged at the time of registration renewal.[39]
In California[citation needed] and New Hampshire,[citation needed] the registration tax is calculated by the current value of the vehicle. As a result, older and more inexpensive vehicles will have a low registration fee, whereas newer and more expensive vehicles will have fees in the hundreds of dollars.
There is also a federal Heavy Vehicle Use Tax (HVUT) or truck tax, for vehicles with gross weights of 55,000 pounds or more, including trucks, truck tractors and buses. Generally, vans, pickup trucks, panel trucks and the like are not subject to this tax. The tax does not apply to vehicles that are used for 5,000 miles or less (7,500 miles or less for agricultural vehicles) on public highways during a tax period.[40]
Additionally, "New York State imposes a highway use tax (HUT) on motor carriers operating certain motor vehicles on New York State public highways (excluding toll-paid portions of the New York State Thruway). The tax rate is based on the weight of the motor vehicle and the method that you choose to report the tax."[41]