The state has been levying motor vehicle taxes since 1922 – and there have been exceptions since the first version of the law. Over the years, the number of reasons to pay no or fewer taxes grows. In total, the state coffers lose one billion euros a year, according to the Federal Audit Office.
The Federal Court of Auditors is demanding the deletion of numerous exemptions from motor vehicle tax – immediately. According to a report by the Court of Auditors to the Bundestag, the authority expects the responsible Federal Ministry of Finance “to initiate the reform of motor vehicle tax benefits without further delay”. It’s about a loss of revenue of more than one billion euros annually.
In the four-page letter, the Court of Auditors relies primarily on a report by the University of Cologne, which was commissioned by the Federal Ministry of Finance and has been available since autumn 2019. According to this, the numerous car tax benefits are “at least gradually to be reduced”. But: “Consequences did not follow this assessment,” complained the Federal Court of Auditors.
Many of the exemptions “are demonstrably inefficient or have already achieved their goal,” emphasizes the authority. According to the report, they “partly do not contribute to a sustainable and climate-friendly further development of tax law”. The Federal Court of Auditors called on the ministry to start “a gradual review of all statutory exceptions”. “The aim must be to dismantle outdated and no longer effective regulations and to end long-term subsidies.”
As the Federal Court of Auditors explains, the first motor vehicle tax law from 1922 already provided for tax exemptions for certain cases, such as for “tractors used in agricultural operations”. With later changes in the law, the regulations were expanded – meanwhile, tax exemptions and other exceptions apply to ten percent of the vehicle stock in Germany.
“All in all, they lead to annual shortfalls of more than 1 billion euros,” summed up the Court of Auditors. The federal government currently collects around 9.5 billion euros in motor vehicle tax annually.
The Court of Auditors is disappointed by the leadership of the Federal Ministry of Finance. “The BMF has so far not taken any initiative to reduce outdated and no longer effective tax breaks. It has allowed old, unlimited exemption provisions and exceptions from standard taxation to continue to exist despite the proven need for reform,” the report says.
A reform initiative by the ministry has been “years overdue”. However, more recent statements by Christian Lindner’s department also show “that it does not want to take any initiative to tackle the necessary reform of motor vehicle tax breaks”. The Federal Court of Auditors had raised the issue earlier. Among other things, the agency listed it in its latest annual report, published in December.
The Greens budget politician Paula Piechotta supports the demand of the Federal Court of Auditors. The ministry has not abolished the special rules for motor vehicle tax for more than ten years. “In view of the tense budgetary situation, it is now finally incomprehensible why this tax revenue is being forgone.” In view of multiple crises, narrow financial leeway and the goal of making Germany climate-neutral, Germany can no longer afford to water down the taxation of motor vehicles with decades-old exceptions and special rules, according to Piechotta.
The Audit Committee of the Bundestag has asked the Ministry of Finance to report to the committee by the end of 2023 to check every motor vehicle tax benefit for continued existence.
