December 1, 2022

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Naf believes that an increase in the value-added tax on electric cars could lead to a reduction of 270,000 electric cars on the roads

This is what the Norwegian Automobile Federation (NAF) wrote in a press release.

The government has not announced the full value-added tax, but Nav fears the tax increases planned by the government will slow the increase in the proportion of electric cars on Norway’s roads.

Increasing taxes on electric cars will have a triple negative effect. Switching to an electric car will be more expensive, emissions will be greater and people in rural areas may be stuck in petrol and diesel cars, which are getting more and more expensive to run.says Ingunn Handagard, Naf’s Director of Press.

More tax increases

The government agreed that those who buy an electric car at a price of more than 500,000, must pay VAT on the difference between that amount and the price of the car. In addition, a weight tax is planned for all cars, and it will increase the maximum rate for electric cars in tariff rings from 50 to 70 percent of what fossil car owners have to pay.

The changes have not yet been adopted, but they are part of the proposed state budget that Parliament has to consider.

Handgard tells NTB that when they calculate specifically what a full VAT means for an electric car, the reason is that the Institute for Transport Economics has numbers they can use as a starting point. They estimated how sales of electric cars would develop at different tax levels, in a report which was released last year.

It is believed that sales are barely affected

The NTB asked the Treasury how it assessed the consequences of the tax changes adopted, and whether it would be appropriate to increase the level of tax further.

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State Minister Lars Wangen (Sp) replied that the government’s proposal was considered not to significantly affect the share of electric cars.

He also points out that Norwegians already buy mainly electric cars.

So far this year, 80 percent of all new cars are electric cars. And so we’re on track toward the goal of all new passenger cars being zero-emissions cars by 2025, Wangen wrote in an email to NTB.

Whether it is appropriate to apply a full VAT to electric vehicles in the long term, Wangen will not answer.

The government will likely return to future tax changes in subsequent budgets.