There's a catch though: fuel taxes in Europe are important part of government's tax income. In my country it is like 10% of all taxes collected. Now, if everyone switches to electric vehicles this income source will dry out. Governments will have to replace it with something, so my guess is, they will at some point impose similar taxes on electricity.
That has been the elephant in the room since the first dreams of all electric car fleet. I have not seen a proposal (or even commentary on) how governments will deal with this. I doubt they can tax electricity in such an easy manner (even in energy equivalents). In Germany the tax is roughly ~50 cents on a liter of gasoline + 19% on top of that VAT + (German) emission tax (for modern diesel 300 Eur/year/car). Thats on the order of 10(s) billion in a year to the federal government from CE cars.
I get nightmares thinking what that will do to electricitry prices. The graph of how they rose is already awful.
And now imagine if the tax collected on mineral oil for gas falls away cause everyone drives electric. And know that there isn't a specific car electricity to tax.
Thinking the government would just eat this loss without thinking of ways to make the people pay would just be naive.
Whole reason they are doing this is because increased energy costs have driven demand for electric cars — which points to the real solution — phase out subsidies for petroleum based energy and systems, then increase taxes on them; UK has some of the largest subsidies for oil & gas in Europe.
I suspect that the move to EV will eventually create a revenue hole from reduced fuel taxes necessitating the move to road pricing. Politically unpalatable but I think a necessary step.
Second edge: because they can't afford to make the electricity generation plants big enough and the electricity grids robust enough to stand the charging of millions of electric vehicles on a daily basis.
Why would it happen elsewhere, unless other countries adopt the same tax policies? The main stimuli behind it was ridiculous tax on new vehicles that was absent on electric cars - if a new Tesla S costs the same as a basic VW Passat, it's a no brainer that Tesla sells better. But even in very wealthy countries(UK) electric cars are still much more expensive than normal cars and when I was buying 2 new cars last year it just didn't make any sense to purchase electric - the saving on a petrol car vs. Electric would pay for more years of fuel than I plan to keep the car for. Now, if those other cars were taxed at 100% or if the fuel was even more expensive than it is - then sure, it would make perfect sense. But as it stands now, no one is breaking into the cheap car market.
I can't picture this being much of a big deal. Sounds like we'd be talking about going from £0 yearly to £165. Electric cars already cost well into the tens of thousands. Very few people are going to balk at paying that little tax for a car that cost them 500x that. And what's the alternative? You buy a petrol/diesel, you'd pay the same.
It's not because they need the tax break it's because the government wants them to buy a hybrid over a combustion engine car. It's quite simple.
The tax breaks here in Denmark were more substantial, before they were phased out. Normal cars have like a 170% tax on them that electric cars were exempt from.
This was always on the cards, the only surprise to me is that someone has moved on it so fast.
The major problem facing governments over growth of electric cars is loss in tax revenue currently enjoyed from fuel taxes. In most places the amount of fuel tax collected far exceeds that which is spent on road infrastructure. Governments simply take activities with inelastic demand as the best place for collecting revenue. Because fuel was primarily used for transportation, which has a very inelastic curve, it always has been heavily taxed. Same goes for airline travel and smoking. Flying and tobacco taxes all normally bring in far more revenue than they cost the government - because taxes are levied on a basis of extract sufficient feathers from the goose with a minimum of hissing.
The problem with electric cars (as far as revenue collection goes) is that you can plug them in anywhere. But putting extra broad-based taxes on electricity consumption is electoral poison. So how to tax vehicle-destined electricity? If electric cars start to supplant liquid fuels in large numbers, governments are looking at a major revenue source drying up.
Adding a fixed charge seems like a simple but problem-ridden way of solving it, but makes more sense than trying to do things like have specially-taxed outlets for electric cars.
Personally I think a per-mile charge based on vehicle size is the correct way to go (regardless of fuel type or vehicle class). Drive less, pay less. Drive smaller vehicles, pay less. But doing so naturally attracts the ire of those with a problem being tracked. And so on we go. Taxation is imperfect.
My guess is that they are doing this before electric-car ownership becomes a big group. That way a smaller charge can be introduced and normalised before the group gets too large. It's always easier to incrementally creep up a tax rather than introduce a new one.
The upper middle class Tesla or EV owner insists on tax-subsidies for electric cars, not paying for roads because they don't pay fuel tax, and expecting free parking and free electricity for charging in municpal parking garages.
Apparently, those policies are saving the planet. Can we just do that scheme for every car on the road? Will it scale?
An interesting question for this is will governments start with 'electricity tax'. There will be a ~$40bn revenue hole from cars swapping to electric in USA. Even proportionally more in Europe and Australia where the fuel taxes are much higher.
The dirty little secret in England is that the government derives tremendous tax revenue out of gasoline taxes. Actually all of the European governments depend that revenue. What happens when EV’s take over?
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