The European Union sought sweeping powers over national car regulations on 27 January, aiming to prevent a repeat of Volkswagen's emissions test cheating scandal and sparking a tough debate as governments and industry resist change.

Europe's Industry Commissioner Elzbieta Bienkowska said Brussels would be able to order spot checks on vehicles and order recalls under the proposed new rules. VW recently rejected a demand from the EU's industry commissioner to launch a compensation scheme for car owners in Europe affected by the emissions scandal.

"If national authorities place – according to the new rules – new legislation we are taking no additional steps. If they are not executing regulations I mean this future regulation on type of approval system then the commission has the power to withdraw and even to recall the vehicles," Bienkowska said.

She added the new rules would also allow Brussels to impose penalties on carmakers of up to €30,000 (£22,867, $32,625) per vehicle for failure to comply with environmental laws – if no fine was being imposed by the member state. "If member states do not do it by themselves then it goes the European level and then we can put a fine of €30,000 per vehicle for the company," Bienkowska said.

Jyrki Katainen, the European Commission's vice-president for jobs, growth, investment and competitiveness, said the new plans would also encourage peer review of national authorities by authorising individual EU member states to recall cars approved by any of the bloc's other nations for violations.

"The latest pull to which really strengthen either both EU's role but also national authorities' role and creates a peer surveillance opportunity. If there is a person who is still capable to circumvent the requirements or is capable to cheat the new proposal the person must be really pathological case," Katainen said.

The planned legislation is the strongest EU response yet to VW's admission in September 2015 that it used software to cheat US diesel admissions tests – a scandal that has shone a light on the EU's lax vehicle regulations.

If the new legislation is approved by EU member states and the European Parliament, future breaches would result in possible multi-billion euro costs for manufacturers. The reform also seeks to break cosy relations between carmakers and the laboratories they hire to test new vehicles by introducing a funding pool from which testing agencies are paid.

Under the new plan, the EU executive would be able to fine or suspend the licences of testing bodies it deemed too lax. Brussels is also trying to close a loophole whereby testing for toxic nitrogen oxide (NOx) pollutants is held in artificial rather than real road condition. But that legislation faces opposition in European Parliament because the current proposal would still allow cars to carry on spewing out more than twice official emissions limits.

Additional reporting by Reuters.

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