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Luxury tax on cars to 20,000 euros will be cancelled

09 February 2011 / 18:02:05  GRReporter
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The government announced that it was ready to cancel the luxury tax on new cars to 20,000 euros. So far, the additional tax has burdened the end price of cars with at least 10%. Its cancellation will allow car buyers to pay 500 to 900 euros less. Given the reduction in road tax and some other tax concessions buyers will be able to save between 960 and 4000 euros for more expensive cars.

The measures to reduce the end price of cars aim to revive the somewhat limited car market and stimulate buyers’ interest. According to experts in the field, the demand for new cars has fallen by almost 70% just for the two years between 2008-2010. As a result, many private houses and representative offices had to cease activities and importers suffered serious losses.

Traders look forward to old cars recycling which provides a price discount when purchasing a new car. They believe this measure is crucial for increasing peoples' interest in purchasing a new car.

One of the first measures the PASOK government deemed unnecessary was recycling. At the end of 2009 the Finance Minister George Papaconstantinou and the Minister of Environment and Energy Tina Birbili held a press conference. It was stated then that the state could not afford to pay 400 million euros to support the program for old cars recycling and cancelled it.
 
The sharp drop in car sales in 2010, however, proved that the minister was not right. The treasury lost much more due to the low turnover of the automotive market. Tax revenues lost from this proved to exceed the cost savings of recycling cancellation. So, the program officially will enter into force again on 21 February this year.

Cars should be at least 12 years old with registration until 31 December 1998 or before that date. In return for the recycling of the old car the buyer is exempt from 50 or 100 percent of the registration fee depending on engine capacity.

For new cars up to 900 cubic metres the state covers the full amount of registration or 100% if the tax assessment of the new vehicle is up to 6000 euros. The fee will be fully covered if cars up to 1400 cubic metres are assessed at 8000 euros. People who buy cars up to 2000 cubic metres with tax assessment not exceeding 14,000 euros will pay 50% of the registration fee. According to the publication in Ethnos, the tax assessment is made up of the factory price and the transportation cost of the car from the producing country to Greece.

 

Tags: EconomyMarketsCar marketsLuxury tax
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