In an effort to recoup lost income, officials are stripping electric cars of a special status, sparking intense debate and concern that the state could jeopardize its goal of no new combustion-engine cars being sold by 2025. The fee waiver was the first to take effect in 2017. Now, Norway’s center-left coalition government is considering removing a much broader list of incentives as part of the ongoing budget negotiations.
There is widespread uncertainty about which taxes will be reimposed. But the country’s auto federations and environmental groups believe the four most likely to return are taxes on hybrid cars, a used electric vehicle sales tax, and a “luxury electric car” tax that costs more than 600,000 Norwegian krone ($68,650), revival of the annual ownership tax for electric vehicles.
Labor MP Frode Jacobsen did not comment in detail on the ongoing budget discussions, but emphasized that current proposals include raising taxes on some hybrid components. He added that the “luxury electric car” tax would not be included in next year’s budget, although he did not say it was excluded for the following years.
In another country, it would be surprising if a left-wing government would support such policies. But Lacey Friedstrom, chief economics researcher at the Oslo Institute for Transportation Economics, a think-tank, says there is a feeling across the political spectrum that it is time to tax electric vehicles because they are no longer new. “The new Labor government has just kept the proposal made by the previous right-wing or conservative government,” he adds. “So yes, there is consensus. But environmentalists, of course, are not happy.”
Environmentalists in Norway say they are not against the idea of taxing electric vehicles as long as taxes on fossil fuel cars also remain high. But there is concern about false taxes that come in too soon. “This could cause major setbacks,” Hogg says. “It seems strange that VAT is being reintroduced to cars over 600,000 kronor because these are the useful cars” in rural areas where people spend more time on the road, and need to drive electric cars for longer distances, he says.
Perv is also concerned about the timing. She believes that a tax on sales of used electric cars would undermine the market before it has a chance to develop, while a tax on hybrid cars would hurt drivers who live in the north of the country and who do not have access to the extensive charging infrastructure found in the south. It reflects the Norwegian consensus that hybrid cars are a “transitional technology” that will eventually stand in the way of full electrification. However, it is a transitional technology that we believe is still necessary because of it [the EV market is] Not quite mature.” Case in point: Electric vehicles still make up only 15 percent of the total number of vehicles in Norway, according to the Road Traffic Information Council. It’s a big number by world standards, but there is still a long way to go.
Unni Berg of the Norwegian Electric Vehicle Federation, a consumer group representing electric car drivers, says it’s not current electric car drivers who will be threatened by incentive withdrawals – but rather people who haven’t joined their ranks yet. “We are not fighting for our members but we are fighting for new people to become electric car drivers,” she says, adding that the group’s main goal is to ensure that exemptions from value-added tax and purchase tax continue to apply.