New Danish Vehicle Taxes Finally In Place

I guess this is “green week of the year” in Danish politics. Not only did the Danish parliament just vote unanimously on ending the fairytale of Danish oil, but a new agreement on car taxes has also fallen into place, finally. However, as with the oil, is it maybe too little too late? The Danish Motorist Association FDM has an opinion on that, as well as some price examples. And so do I.

Photo by Jesper Berggreen

The agreement reached between the Danish government ruling parties turn the way taxation of cars is calculated on its head. Among other things, tax now increases with vehicle CO2 emission levels. Although the tax calculation is generally based on the previous model, new measures have been introduced which cause some cars’ taxes to increase while other cars’ taxes fall in price.

The final prices from the importers have not been announced yet, but FDM has calculated prices for 11 popular cars. According to the calculations, electric cars and plug-in hybrids will not jump disproportionally in price starting 2021, which was previously a concern in the old scheme. Battery electric vehicles under DKK 400,000 ($65,150) will still be 100% tax exempt.

Source: FDM

All in all, I think this is a fine compromise. The current tax system is almost impossible to change radically in favor of green mobility without losing too much in tax revenue. Let’s see how this plays out. In any case, I am not in doubt that the market forces will push for EV dominance much sooner than most expect anyway.