This paper investigates whether the vehicle taxation system in Belgium is stimulating the demand of clean vehicle technologies. A life-cycle cost analysis will be performed to evaluate the cost-efficiency of several vehicle technologies within the current fiscal system. The paper also examines whether a new vehicle taxation system, based on the environmental performance of vehicles, would be effective in tackling the current distortions while keeping the good incentives for stimulating the demand of clean vehicle technologies. This new vehicle taxation system will be based on an environmental rating tool, the so-called Ecoscore. The Ecoscore enables a comparison of the environmental burden caused by vehicles with different drive trains and using different fuels, and is, in this respect, a very appropriate instrument to introduce a technology-neutral reform of the fiscal system.

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