Car scrappage scheme scrapped

Gov’t keeps road tax at high levels, but removes benefits to owners wishing to opt for vehicle renewal

By Prokopis Hadzinikolaou - Kathimerini

The government decided yesterday to end a car scrappage scheme in place for older vehicles, while maintaining at high levels the road tax set by the previous government for a large number of cars in conjunction with the withdrawal incentive.

At a meeting yesterday, Finance Minister Giorgos Papaconstantinou and Environment Minister Tina Birbili decided that the measure should be abandoned due to its high costs. As a result, only those who managed to withdraw their cars up until yesterday (some 70,000 owners) will enjoy the benefits of the previous government’s measure.

This move is certain to raise the objections of sector professionals who had based their business plans on the scheme, as well as sparking complaints from citizens who had heard Papaconstantinou in the last few days say that there would be changes to the measures, but not its abolition altogether.

Car importers and representatives had estimated that about 730,000 car owners would withdraw their vehicles by 2012. Now they will have to keep their cars and additionally pay a high road tax.

Papaconstantinou attributed the decision to the heavy burden (some 400 million euros) the measure would have for the budget, stating that “in these difficult fiscal conditions this measure represents a great cost for the budget without contributing to the boosting of our country’s production capacity. This measure serves only to boost imports and therefore exacerbates the current account deficit without supporting domestic growth and employment.”

The previous government had estimated the cost of the withdrawal measure at 2.5 billion euros and had expected it to generate some 3.3 billion euros through sales of new cars.

Meanwhile, Birbili said yesterday that a plan for environmentally friendly vehicles only being allowed in the city center is also being withdrawn.