PiS promised a car tax in the KPO. Now the ministry has a bite. Negotiations with the EC are ongoing

The new solutions are to be “financially neutral” for the vast majority of car buyers, argues the Ministry of Climate. Information regarding fees for combustion cars has recently aroused a lot of emotions. First, there was information about work on new taxes, and then – What is it like in the end? We addressed this question directly to the ministry.

The new taxes were included by the PiS government in the National Reconstruction Plan. So that Poland receives money from the so-called transport component of the KPO (i.e. simply the transport part), must meet certain requirements, the so-called milestones. These included fees that were intended to make combustion cars less attractive and electric cars or public transport more profitable.

Car tax. The government is in trouble

The new fees promised in the KPO were to be created in the spirit of the “polluter pays” principle. In practice, this means that owning an older car, perhaps one with a larger engine or higher weight, would incur a higher premium. This tax was to be paid by car owners once a year. Poland is one of the few EU countries (along with e.g. Estonia and Slovakia) where there is still no such tax. For example, Hungarians and Germans pay the equivalent of approximately PLN 220 for a small petrol car, or PLN 400-600 for an SUV. The Netherlands holds the record in this respect, where the annual fee for a small car is over PLN 2,000, and for an SUV even PLN 4,500. It was not certain how much the fee would be in Poland.

Now the government wants it to disappear altogether. According to Deputy Minister Krzysztof Bolesta, who is responsible for, among others, in the Ministry of Climate: for mobility, the government, as part of the revision of the KPO, requests permission to delete this tax. Will it work? It is unknown at this time.

Bolesta said negotiations with the European Commission were ongoing and he expected a response to the Polish request within a few weeks. It is possible that getting rid of the tax will have “costs” – in exchange for the EC’s consent, it may, for example, demand another mechanism for transformation in transport or limit the funds allocated under the KPO. What if Poland hears a hard “no” to the deletion of the car tax? Then, the deputy minister admits, Poland “will have a problem.” The government will either have to introduce a tax that – it can be assumed – will not be popular, or one of the milestones will not be met and part of the KPO funds will be lost.

What else in KPO Poland? There will be changes in excise duty

The second element of the KPO is a tax operating on a similar principle when registering a car for the first time. Here, the government also wants to eliminate the new, additional fee, but the idea does not disappear completely. Instead, excise duty is to be reformed, which buyers already pay when registering a car for the first time in Poland (i.e. paid, for example, for a car imported from abroad, but not when it is resold in Poland again). It should enter into force from 2025.

Currently, the amount depends on the value of the car and engine capacity. In order to adjust the excise tax in the spirit of what was specified in the KPO, the climate aspect and the “polluter pays” principle are to be taken into account. What does this mean in practice? The new form of calculating excise duty may take into account not only the engine capacity, but also exhaust emission standards and the total weight of the car. How exactly it will be calculated and how much we will pay when registering the car – it is not known yet. As Bolesta said, the ministries of climate and finance are working on it, and the solution will also have to be approved by the European Commission.

However, the deputy minister revealed the main assumptions – primarily that the change is to be “neutral” and perhaps even financially beneficial for as many as 90 percent. registering cars. The tax upon registration will probably increase for cars meeting the EURO 3 emission standard or lower, i.e. manufactured before 2006 (i.e. today 18 years old and older). For cars with the EURO 4 standard and higher (models from 2006 onwards), the fee is to remain at the same level as now or even drop (depending on what factors will be taken into account). Such cars constitute approximately 90 percent. registered in Poland. In this way, higher costs will only affect – as the ministry says – only about 10 percent. the oldest cars imported to Poland and at the same time those that pollute the most. It is worth adding that diesel cars with the Euro 3 standard and lower will not be able to enter the Warsaw Clean Transport Zone.