Published on July 25th, 2018 | by Jesper Berggreen0
The Madness Of Danish Car Taxation Will Never End
July 25th, 2018 by Jesper Berggreen
With incentives on electric vehicles (EV) in Canada being cancelled and German EV owners being threatened to pay back incentives, Denmark is maybe not the worst country to live in when shopping for an EV after all. But then again, maybe it is.
The tax schemes for automobiles in Denmark is like a lottery for those planning to buy a new car. Last year taxes were lowered on vehicles with internal combustion engine (ICEV) in such a way that big thirsty cars had a proportionally bigger price cut than small frugal cars which in most cases got no cut and the plan of increasing tax on EVs remained unchanged. The government’s motivation was to strengthen the incentive to buy safer cars.
It worked. Since then, Danes have rushed to buy bigger ICEVs and as a result, CO2 emissions from the transportation sector has increased according to dr.dk who has crunched the numbers. And now it will be even worse because the government has realized that the new Worldwide Harmonized Light Vehicle Test Procedure (WLTP) will result in correct mileage measurements as opposed to the very optimistic result that we’ve had so far from using the New European Driving Cycle (NEDC). The result would be that the thirsty big cars would get more expensive. Good right? Not if you ask the government, who obviously panicked at the prospect of raising the tax burden on their voters.
According to Ingeniøren, the government now has a full mandate to enforce new taxation rules to be in effect from September 1, 2018, which eases off taxation on all ICEVs that suddenly have worse mileage on paper as measured with WLTP. A side effect of this is that big thirsty cars get a proportionally bigger price cut than small frugal cars. Wait, it sounds like I’m repeating myself? No, it’s worse than that, because some smaller cars actually get more expensive this time. An example from Opel in Denmark shows that a small Opel Karl at a base price of DKK 110,000 ($17,300) will have a DKK 16,800 ($2,600) increase in price. Madness, once again. But maybe there is a small glimpse of hope for EVs?
After the unprecedented political consensus on renewable energy initiative in this country recently, the government promised they would present a plan for the transportation sector later this year. Now the newspaper Politiken reveals confidential government correspondence that confirms this, which the newspaper subsequently interprets thus: “How to get motorists to buy electric cars rather than gas-guzzlers.” The alleged correspondence goes on to propose a direct grant of DKK 50,000 ($7,800) per electric car as one of several initiatives to increase the sale of electric cars in Denmark. Unfortunately, it seems this proposal is meant to last only until 2021 or until 10,000 cars are sold. 10,000?
Please, this is again all talk and no action. As I have reported earlier, all this could be avoided with a technically based flat tax. Which will never happen. Sorry to have wasted your time on Danish car taxes, again…