The reform of the Flemish registration and annual road taxes: did they cause a change in the CO2 emission factors of new cars?

The Flemish Region in Belgium reformed its registration tax for passenger cars and its annual road tax in 2012 and 2016 respectively, to reflect a car's CO₂ emissions and Euro pollution class. Moreover, from 2019 to 2020, natural persons and the self-employed could obtain a premium for the purchase of a zero-emission car. Using a difference-in-differences analysis, we find that the reform of the registration tax has caused an accelerated decrease in the CO₂ emission factors of new cars sold in Flanders, compared to other regions. This result holds for privately owned cars as well as company cars. However, the average treatment effect was rather small compared to the counterfactual. The additional effects of the reform of the annual road tax and the zero-emission car premium are even smaller than for the registration tax, and not significant in the case of private cars.