Electric car shock: Switzerland reveals astronomical costs and tax losses due to EV boom!
Switzerland has announced it will abolish tax incentives for the purchase of electric vehicles (EVs) from January 1, 2024, amid concerns over rising tax losses due to the EV boom. Importers of electric vehicles will now have to pay a tax levy of four percent of the vehicle's import price. This removes the tax exemption that has been in place since 1997.
The decision is a reaction to the increasing loss of revenue from the so-called automobile tax, which will be exacerbated by the growing popularity of e-vehicles, which will account for 23% of new registrations in the first half of 2023. The Swiss Federal Council expects tax losses of 100 to 150 million Swiss francs for the current year alone. The cumulative tax losses for the years 2024 to 2030, if the tax exemption is continued, are estimated at two to three billion Swiss francs.
When the tax exemption was introduced, it was intended to compensate for the significantly higher acquisition costs of electric vehicles. However, as the production costs for electric cars are falling steadily, the Federal Council assumes that price parity will be achieved between cars powered by fossil fuels and electric cars by 2025.
The change affects the "debtors", in this case the importers of the vehicles, who have the option of adding the tax costs to the sales price. The vehicle tax in Switzerland is earmarked for a specific purpose, with the revenue going to the National Road and Agglomeration Transport Fund (NAF).
Switzerland's move is in stark contrast to the German government's approach, which seeks to extend tax incentives for e-vehicles. The current tax law in Germany stipulates that employees only have to pay 0.25 percent of the gross list price of an all-electric company car for private use, provided the car costs less than 60,000 euros.
However, this has sparked criticism from environmental associations such as Deutsche Umwelthilfe (DUH), who argue that the regulation encourages the purchase of large, overpowered electric company cars and are calling for the "socially unjust and climate-damaging company car privilege" to be abolished.
The different tax strategies highlight the challenge for governments to balance the promotion of sustainable mobility with the need to manage tax revenues effectively in the face of the growing market for electric cars.