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Case C-132/88 Commission v Greece (Car Tax) [1990]

Case C-132/88 Commission of the European Communities v Hellenic Republic (Taxation of motor cars) [1990]

Facts

  • Greece implemented a tiered car tax system, which taxed cars based on their engine capacities
  • The top tier of this system imposed a high flat rate tax on vehicles with engine capacities greater than 1800cc
  • Greece did not manufacture any cars with engine capacities greater than 1800cc, therefore no domestic cars fit into the high rate tax band

Issue

  • Was this top tier flat rate discriminatory against foreign products, given that it targeted them exclusively?

Decision

  • No

Reasoning

  • Usually, and contrary to Humblot, an objective, and not an effects-based test was used to conclude that the tax was not contrary to Art 110 TFEU on the prohibition of internal taxes
  • It was said that the tax could be justified in the interest of protecting the environment, despite the fact that such a large tax-jump from a small change in engine capacity would be likely to discourage the purchase of the larger-engined (and always foreign) cars
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