Master thesis : "Effectiveness analysis of the 25-Nov-2021 law aiming to electrify company cars and to stimulate the Mobility Budget."

Abstract

On 03-Dec-2021, the Belgian Official Publication Journal published the 25-Nov-2021 law . The 25-Nov-2011 law is titled “Loi organisant le verdissement fiscal et social de la mobilité” (FR) / “Wet houdende fiscale en sociale vergroening van de mobiliteit” (NL), hereafter ‘the fiscal greening law’. The 25-Nov-2011 law introduces changes to the company car system in Belgium. While the 25-Nov-2011 law does not aim to remove the company car system altogether, it aims at greenifying company cars for environmental reasons (CO2 emissions, air quality, congestion) as well as promoting previous legislation (the Mobility Budget). The legislator seeks to achieve the environmental goal of “greenification” by means of fiscal measures. Company cars are taxed more favorably than wages in Belgium, which makes the company car an attractive salary benefit. Within the company car system, the 25-Nov-2011 law plans to gradually reduce company cars with a combustion engine and to incentivize the adoption of electric company cars through fiscal measures. The end point projected by the 25-Nov-2011 law represents a critical point where it is only fiscally advantageous for company cars to be zero emission. Company cars that are not zero emissions, i.e., powered through a combustion engine, will not be banned; but will be fiscally highly unfavorable for employers and employees alike. The present thesis aims to evaluate the effectiveness of the 25-Nov-2011 law, i.e., understand the objectives of the 25-Nov-2011 law and the likelihood that the 25-Nov-2011 law’s objectives are going to be achieved, through weighing factors enabling the achievement of the 25-Nov-2011 law’s objectives, as well as the potential obstacles that could impede their fulfillment. Although the 25-Nov-2021 law introduces fiscal changes with regards to the treatment of trucks in a minor way, the present thesis is only focused on company cars offered to employees as part of the compensation package. By way of definition, a company car “is made available to a worker by his or her company or employer and which may be used for private reasons. Therefore, personal vehicles belonging to self-employed workers (primary, secondary or assisting) or service vehicles which an employer makes available to staff for exclusively professional use, are not included in this definition.” (Xavier May, 2017, p. 3). The present thesis therefore is not focused on the fiscal changes impacting other transport vehicles. Part I of the thesis will use the 25-Nov-2011 law text, the legislative preparatory documents and scientific literature, to determine the 25-Nov-2011 law’s objectives and implementation modalities. Part I will also address the 25-Nov-2011 law’s effectiveness analysis through identifying a number of enabling factors and challenges that will be subsequently vetted in Part II. Part II of the thesis will present the response of a sample of the companies that are affected by the 25-Nov-2011 law, through exploratory interviews. As 2023 marks the first year where some of the milestones set by the 25-Nov-2011 law come into effect, Part II will identify the reactions of the companies interviewed about the 25-Nov-2011 law, understand how the transition has been so far, and gauge the companies’ position on the enabling factors and challenges previously identified, as well as the challenges faced until now and those anticipated in the future. Part III of the thesis will provide a discussion of the findings, as well as the identified shortcomings in the 25-Nov-2021 law through the interviews conducted, and suggestions on how to minimize the shortcomings. Part III will also provide potential solutions on how to strengthen the effectiveness of the 25-Nov-2021 law.