Tax Horsepower - Germany

Germany

Tax horse-power (Steuer-PS) was introduced in Germany on 3 June 1906. It was based on the number of cylinders in the car's engine multiplied by the cylinder bore (or diameter) multiplied by the length of the piston stroke in the cylinder stroke. It therefore took account of the overall engine displacement from the beginning. This was in contrast to the British tax horsepower formula which used the cylinder bore (or diameter) but ignored the length of the piston stroke in the cylinder and so encouraged manufacturers to design engines with implausibly long thin cylinders.

The German formula applied a higher tax horse-power factor to two stroke engined cars than to four stroke engined cars based on the contention that a two stroke engine, wherein each cylinder produces explosive power every time the piston moves down, works harder than a four stroke engine wherein each cylinder produces explosive power only during one downward movement in every two.

The formula for tax horsepower was as follows:

1 unit of tax horse-power (Steuer-PS) for four-stroke engined cars = 0.30 x i x d2 x s

1 unit of tax horse-power (Steuer-PS) for two-stroke engined cars = 0.45 x i x d2 x s

In these formulae:

i = the number of cylinders

d = the diameter (or bore) of each cylinder

s = the stroke length of each cylinder

Because the formula took account of both the bore and the stroke of each cylinder there was a direct linear relationship between a car's engine size and its tax horsepower according to the German formula. Using the engine size data it was possible to determine the tax horsepower using the following data:

1 unit of tax horse-power (Steuer-PS) (for four-stroke engined cars) = 261.8 cc

1 unit of tax horse-power (Steuer-PS) (for two-stroke engined cars) = 175.5 cc

Incomplete fractions were rounded up to the nearest whole number so a four stroke engined car of 1,000cc would end up designated as a 4PS (or four horsepower) car for car tax purposes.

After April 1928, recognizing the logic of the linear relationship between tax horsepower and engine capacity, the authorities simply set car tax rates according to engine size for passenger cars. (For commercial vehicles vehicle tax became a function of vehicle weight.) Attempts to correlate new tax horsepower values with old ones result in small differences due to roundings used in the new formula which are, for most purposes, unimportant.

In 1933 the Hitler government came into power and identified promotion of the auto-industry as key to economic recovery: new cars purchased after April 1933 were no longer burdened by an annual car tax charge and German passenger car production surged from 41,727 in 1932 to 276,804 in 1938. Thereafter war and military defeat led to a change in car tax policy and after 1945 tax horse-power returned in West Germany, applying the 1928 formula, as a determinant of annual car tax on new cars purchased in or after 1945. However, the introduction of tax on road fuel in 1951 and progressive increases in fuel tax thereafter reduced the importance of annual car tax so that today far more of the tax on car ownership is collected via fuel taxes than via annual car tax.