Italian government wants to remove tax on high-powered combustion cars

The Italian government plans to remove a tax specific to vehicles with powerful combustion engines implemented to limit the use of polluting cars.

© Dante Juhasz

Matteo Salvini, the former Premier and now minister of Infrastructure and Transport, on May 11, confirmed the government wants to remove the superbollo, or super vignette, which he considers “an odious tax,” in order to “give oxygen to the automotive market.

The tax applies to cars with internal combustion engine power that exceeds 185 kW (251 horsepower). The owners of such vehicles need to pay 20 euros (22 dollars) for each kW that exceeds the 185 kW limit.

The tax mostly applies to luxury and sports cars – including the Ferraris, Maseratis, Lamborghinis – and some medium-sized sedans and SUVs.

Cars with less powerful engines also need to pay a vignette, which can go up to 587 euros per year for a car with 185 kW. Then, 20 euros are added for every kW in excess – the power of electric engines doesn’t count – although the amount decreases with the years. The incremental tax goes from 20 euros to 12 euros five years after the car’s first registration, 6 euros after ten years, 3 euros after 15 years and has no incremental tax for 20-year-old cars.

The superbollo brings about 100,000 million euros of tax revenue to Italy annually.

The president of the Automobile Club of Italy, Angelo Sticchi Damiani, greeted the news of the removal of a tax “as unfair as it is useless,” which represents “an anomaly whose only effect is to distort and depress the national car market, which includes the world’s most prestigious car manufacturers. Its abolition will restore full freedom in the production and purchase of cars, without artificial limitations.”

Removing this tax would be the first move of the government’s ambition to revamp and simplify the Italian tax system by the next two years, which includes eliminating many so-called micro-taxes.

One of the symbols of Italy’s tax burden is the one that applies to arcade games, foosball, pool tables and other games with no pay-out cash prizes. Bar owners say the tax, 8% of the revenue and a base fee of 510 euros per year, cost them more than the revenue they actually generate.

Used as a road tax in Europe, the vignette system was introduced in Italy in 1976, removed in 2005 and partially reintroduced in 2007.

The Monti government taxed powerful cars in 2011 to promote environmental protection and discourage using high-polluting vehicles. It strengthened the regulation in 2012.

But its removal has been debated in Italy and put on the table for years, with critics arguing it restrains the automotive market and makes the country lose revenue because it collects less VAT with fewer cars sold.

The center-left government of Enrico Letta, which followed Monti’s, tried to repeal the tax in 2013. It came up again as recently as last year.

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