In the Netherlands over 50,000 cars are exempt from taxation. Besides taxis, these also include government vehicles like police cars, fire engines and military vehicles. Because no vehicle purchase tax or circulation tax is paid on such vehicles, it is appealing to buy a diesel model. As diesel vehicles emit substantially more nitrogen oxides (NOx) than petrol and (semi-) electrical vehicles, the tax exemptions and consequent choice of a diesel vehicle are bad for the environment.
This report calculates the environmental impacts and social costs resulting from the tax exemptions and suggests several policy measures to address the issue.