The Ministry of Transport explains that the purpose of the amendments is to balance the vehicle operating tax rates for passenger cars and trucks with a maximum weight of up to 3,500 kilograms and the procedure for their calculation, as well as to determine the procedure for calculating the bus and truck vehicle operating tax. The draft law also envisages the introduction of a new car registration tax, with the aim of preventing the registration of old and ecologically harmful cars in Latvia.
Car registration tax rates are determined depending on the type of fuel of the car. The aim is to promote the market for clean and energy – efficient vehicles, taking into account their lifetime impact on energy and the environment, including energy consumption and emissions of carbon dioxide and certain pollutants such as nitrogen oxides, non – methane hydrocarbons and particulate matter.
Also, the amendments to the law envisage to improve the Vehicle operation tax rates for trailers from 2021, applying them depending on the weight of the trailers and the number of axles. Tax rates for two-axle, three-axle and more axle semi-trailers will be applied according to the number of axles of the semi-trailers, the unladen weight and the unladen weight of the tractor-towing semi-trailers, the number of axles and the type of suspension (air or mechanical suspension).
The draft law also recalculates the vehicle operation tax rates, which have not been expressed in whole euros since 2014, when the changeover to the euro took place in Latvia.
In addition, from 2021, a new calculation of vehicle operating tax rates will be applied to those vehicles for which carbon dioxide (CO2) emissions have been determined in accordance with the new CO2 emission method.
The Ministry of Transport explains that currently the tax rate for cargo vehicles registered in Latvia is determined taking into account the full weight of the vehicle. In order to promote the registration of cleaner lorries in Latvia, the draft law envisages the application of a new calculation of vehicle operation tax rates for lorries with a gross vehicle weight of 3.5 tonnes to 12 tonnes from 2021, taking into account the emission class “EURO” emission level. Also from 2021, a new calculation of vehicle maintenance tax rates will be applied to vehicles with a gross vehicle weight of more than 12 tonnes and fifth wheel tractors, taking into account the “EURO” emission level and the number of axles.
The Cabinet of Ministers supported the proposal of the Ministry of Transport to increase the revenue forecasts from the Vehicle Operating Tax and corporate car tax revenue for 2021, 2022 and 2023 by 7.8 million euros annually and to increase the grant from the General Revenue and Expenditure by the same amount. in the budget program “State Road Fund” for 2021, 2022 and 2023 in order to ensure the maintenance and renewal of roads. From 2022 of this amount, 600,000 euros will be allocated annually for the construction of bicycle paths.
The government also supported the amendments to the Law on Vehicle Maintenance Tax and Company Car Tax, prepared by the Ministry of Finance, which will also enter into force on 1 January 2021.
The purpose of the amendments is to index the corporate car tax rates, taking into account the growth rate of inflation from 2017, as well as to determine the corporate car tax rate for vehicles with an engine capacity exceeding 3,000 cubic centimeters.
The Saeima has yet to decide on amendments to the law.
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