Spain confirms tax hike for high emission cars

MADRID, July 20 (Reuters) - Spain will raise registration tax for the most polluting cars from January 2008 and cut or eliminate tax for the cleanest vehicles, the Environment Minister said on Friday.

From next year, cars which produce less than 120 grams of carbon dioxide (CO2) per km (0.6 mile), will be exempt from registration tax, while those that emit more than 200 grams per km will pay 14.75 percent.

The latter includes most large sports utility vehicles.

There are two intermediate bands of 4.75 percent and 9.75 percent tax for cars of 120-160 grams per km and 160-200 grams.

Buyers of new cars currently pay between 7 and 12 percent registration tax, depending on engine size.

The minister did not mention any move to increase annual road tax for heavily polluting vehicles, something that the government has talked of in the past.

The tax change is part of a bigger package of measures to reduce Spain's energy consumption and curb its emissions of greenhouse gases.

Homes, services and road transport are the fastest growing sources of CO2.

Most of the major carmakers, including Ford (F.N) and Volkswagen (VOWG.DE), have car plants in Spain.

The carmakers' association Anfac said it welcomed the measures because it would mean lower taxes for most cars sold in the country.

Of the 1.63 million new cars sold last year, 8.5 percent were in the highest emission category and 27.8 percent in the intermediate 160-200 gram bracket.