Some people are very sad at the moment and wondering to themselves "why didn't I wait".

These are the people who have just traded in their car (perhaps a 5-10 year old one) and bought a new car.

They have namely just lost a lot of money compared with doing that in 2008 (or in the rest of 2007 but valid from the 1st of January 2008).

The reason is that the level of car tax has been drastically changed.

But first most of you probably need to know about Finnish car taxes. Finland has a two-tiered system of taxes on any new cars bought here. There is the standard Value-Added tax (over 20% - I can never remember what exactly, 22% at the moment I think or is it 24?) that applies to everything, but there's also a special Car Tax.

This car tax used to be something like 122% (yes, really) and long ago the Finnish government realised that as a part of the Europe Union this wasn't going to work for long so they a few years ago decided on a plan of gradually reducing it.

The first reduction was about 10% (so car tax was then something like 110%) and all that happened was that within several months the car companies increased their pre-tax prices for cars being sent to Finland and most of that "gain" was lost.

So governments (quick to learn in this case) obviously realised that gradual change of tax levels wasn't going to work and started wondering about alternatives.

Now, several years later, the change has come and it's a big one. It also came without warning and is valid from the beginning of 2008.

The rate of car tax is now related to the amount of emissions from the car. So a small car with a diesel motor has typically the smallest amount of tax and efficient small engines (such as VWs new 1.4 TSI engine) are "better" than larger engines producing the same amount of power but with higher emissions.

The change in rates is dramatic and it also means that most cars have a lower car tax rate than before (so savings are said to be between 1 and 5 thousand Euros per car for most models) with only a few large cars with large engines having (heavily) increased car tax levels.

What this also means is of course than the price of used cars goes down - especially that of those reasonably large cars than have not seen their sticker price increased (as there will be from 2010 increased yearly road tax charges for them).

So imagine if you may someone like me (in 4 years in my case) who is planning to trade in a 10 year old car for a new one.

Done last month I'd have got a small allowance for my old car and will have paid todays price (at 110% car tax + 22% normal tax) for a new car. I won't have considered the yearly car tax when deciding which new car to buy because last month the yearly road tax was the same for all cars.

Done on the 2nd of January 2008, I'll still get the small allowance for the old car (because at that level 10% makes little difference) but I'll probably chose a car that has its price reduced by anything between 3 and 5 thousand Euros (and it will be one that will not have a high yearly tax rate from 2010).

No wonder people who did such deals last month are not happy today.

The ones that are of course are the people who bought large petrol-guzzling SUVs. They are in some cases saving tens of thousands of Euros (and no doubt there will be a rush to sign contracts for that kind of car in what's left of this year - no wonder the car sales people are smiling).

P.S. One of the people responsible for the public transport system in the Helsinki area has already pointed out one of the risks with much lower car prices - it suddenly becomes feasible to have more cars per family. I take that even further and say that the risk is that we have large increased population of young drivers. I've seen when I was in Germany that 18-25 year old males (usually males) are involved in a large percentage of car accidents and that hasn't been a major factor here because of the cost of getting into the car market (as high initial prices obviously rip down into high prices for used cars except the really old - and they need expensive repairs). Bad times ahead and not just for the bus companies.