Germany faces energy tax losses as EV sales rise
The rapid shift to electric vehicles in Germany is cutting fuel tax revenue. As EV sales surge, policymakers face growing pressure to find new ways to fund roads and transportation infrastructure.
Germany is grappling with declining energy tax revenues as the adoption of electric vehicles (EVs) surges, said tax and transportation expert Jens Boysen-Hogrefe from the Kiel Institute for the World Economy. Sales of EVs in Europe increased by nearly 30% in the first quarter of 2023 compared to the same period in 2022, according to the International Energy Agency.
Norway leads the way with 95% of new passenger cars being electric, while in Asia-Pacific and Latin America, sales rose by up to 80% and 75% respectively. However, the boom in EVs has not been well-received in Berlin, particularly at the Ministry of Finance. EVs do not incur energy taxes but only minimal electricity taxes, resulting in a significant loss of revenue for the government.
If the shift to electric cars continues without changes to the tax system, the road system could become a money-losing venture for the federal government, potentially leading to billions of euros in losses by 2050. Experts advise the government not to wait for the tax deficit to become critical before taking action, as legislative changes take several terms.
Some countries, such as the UK, Norway, New Zealand, Iceland, and Switzerland, have already implemented measures to address the new situation, including levies on electric cars, annual odometer checks, and road-use charges. Germany is also considering various policy options, including a distance-based toll or vignette system, to compensate for the shortfall in energy tax revenue.
Written by urgent.news from DW English (Business)'s reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
