Low emission cars 'should get tax breaks'

Cars with low carbon dioxide emissions should be exempted from vehicle tax, one of Sweden's governing parties has said.

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Maud Olofsson, leader of the Centre Party, one of the three minor parties in the governing coalition, launched the idea at a seminar in Visby on the island of Gotland. She said she also wants to reward people who cycle or take the bus.

Sweden already makes one-off payments of 10,000 kronor ($1,700) to people who buy low emission cars. These payments had been good, Olofsson said, but argued that something more long term was needed when the current scheme ends in 2009. She said she wanted drivers of greener cars to be freed from car tax for 3-5 years, and vowed to promote the idea to the other governing parties.

"People who emit a small amount of carbon dioxide should pay a small amount of car tax. Those who emit a lot should pay more," she said following a seminar at the Almedalen political week.

"I think the Swedish people quite understand that we are going to design our tax system in this way," she said.

Olofsson's proposal would mean that the owner of an averagely-sized car would pay 4,000-5,000 kronor less in tax per year. This would cost the state around 150 million kronor.

The exact shape of the system would need to be decided in government budget negotiations, Olofsson said, but she would not rule out raising tax on cars with higher emissions.

Olofsson, who is also industry minister, also vowed to look into other ways to encourage companies to give green perks to employees, including tax breaks on company-bought bikes or public transport cards.

"We need to find the type of carrot that can make people say 'I'm not going to drive a car any more, I'm going to take the bus or my bike,'" she said.