Katainen's gasoline dreams

MTV3 published a column on energy taxation (fi) from Finance Minister Jyrki Katainen (National Coalition Party). Katainen defends the government's plans to increase taxes on fuel and electricity as environmentally conscious and timely given the country's economic situation.

The opposition has criticized Katainen's plans to raise taxes more on diesel than gasoline. His argument is that the price of diesel "primarily" affects how many kilometres diesel vehicles log in, not whether a consumer purchases a diesel or a gasoline car, which is affected by other taxes.

I have to admit that the logic here escapes me. Why wouldn't the price of diesel in relation to the price of gas affect what sort of a car one wants to purchase? If driving one type of car becomes more expensive in comparison to driving another type of car, surely that makes the first type of car a less appealing purchase unless there's some reason to assume that the price difference is temporary.

Katainen stresses that fuel tax hikes are a means to keep fuel consumption in check, but that doesn't address the disparity between tax raises for diesel and gas. Presumably one could raise both approximately the same amount and still keep fuel reasonably expensive.

In any case, Katainen plans to favor diesel cars in other ways:

Mr Katainen repeated that his preferred way to support more environmentally friendly diesel motoring was a reform of the annual vehicle tax system.

The minister sees a vehicle tax system based on a car's carbon dioxide emissions in force in early 2010.

That sounds like a sensible way to go.

1 comment:

egan said...

I don't really understand this tax system. As I understand it, Finnish car taxes are piled on when you buy the thing, as opposed to the system in other countries where charges for using petrol and roads make up a large part of government revenue.

They should be looking to make all cars slightly cheaper, and heavily taxing the fuel. This is a little punitive in such a big country, admittedly, but surely that will just encourage people to find the most efficient vehicles?