Bus companies fear car tax changes could hurt business

Environmental groups take differing views on changes

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The Finnish Bus and Coach Association fears that the government's plans to cut the automobile tax could lead to a sharp decline in the use of bus transport.
      Heikki Kääriäinen, Managing Director of the Bus and Coach Association, feels that buses and private cars are the biggest competitors in daily commuter transport, and that in that respect, the proposed tax reform is a bad idea.
     
Kääriäinen notes that after the previous cut in the car tax, in 2003, numbers of bus passengers declined immediately. Passenger numbers have since recovered, but Kääriäinen believes that the consequences of the new change in car taxation will be more severe than those of the previous one.
      To make things worse, the government has proposed an increase in diesel fuel. The Bus and Coach Association calculates that the hike will add EUR 10 million to the annual costs of bus companies.
     
Bus passengers in Espoo interviewed by Helsingin Sanomat on Friday did not believe that the lower car tax could have much of an effect on how they move around.
      Tommi Halme and his daughters, Martta, age four, and Helli Rönkkönen, age three, nearly always travel by bus, Halme says. "It is the most sensible way to travel", Halme says.
      The family owns a car, but they do not use it very often.
     
The government plans to mitigate the impact on public transport by moving forward the EUR 10 million a year in subsidies set aside for public transport in large urban areas.
      Kääriäinen proposes that the competitiveness of public transport should be raised by eliminating the fuel tax on scheduled bus services, as is the case in nearly all other EU countries.
      Also, he feels that value-added tax on bus fares should be brought down to zero, as has been done in other countries. Currently VAT accounts for eight per cent of the price of a bus ticket in Finland.
     
AT WWF Finland, Karoliina Auvinen, head of the environmental organisation's climate programme, welcomes the tax reform. However, environmental groups are expecting much more from the government on the climate front.
      "It is good if the cars in use in Finland get younger. However, the tax cut should be supported through congestion fees, higher fuel taxes, and possibly the gradation of insurance premiums according to emissions."
      Kaisa Kosonen, who is responsible for the climate campaign of the Finnish section of Greenpeace, points out that buying a new car is not an "environmentally friendly act", even if the car were to consume less than before.
     
Although the car tax will not go down until the beginning of next year, the prices of used cars are already going down. For instance, the car retailer Veho immediately dropped the prices of all of its used cars by ten per cent.
      "In practice, we want to get rid of our stock. It is not yet sure what will happen to the prices at the beginning of the year", Veho CEO Esa Mäkinen says.
      Pentti Rantala, head of the Finnish Central Organisation for Motor Trades and Repairs agrees. He says that prices of used cars have generally followed those of new ones fairly closely.


Previously in HS International Edition:
  Emission-based car tax to bring down price of new vehicles next year (2.11.2007)

Links:
  Finnish Bus and Coach Association information brochure (PDF file)

Helsingin Sanomat