Finland is at risk of falling behind in emission reductions if the government proceeds with plans to increase taxes on electric vehicles, according to researchers from VATT Institute for Economic Research and the Finnish Centre of Excellence in Tax Systems Research (FIT).
The researchers argue that the proposed tax hike would diminish the advantages of electric vehicles at a time when the electric vehicle market needs to expand rapidly to meet national emission reduction goals.
The Finnish government’s decision to raise taxes on fully electric and plug-in hybrid vehicles aims to boost tax revenue. The tax hike will mainly affect the annually paid vehicle tax, with an increase of approximately 53 euros for basic vehicle tax and 35 euros for the tax on driving power for electric vehicles.
Researchers emphasize the need for incentives to promote the shift from traditional fuel vehicles to electric vehicles to meet climate targets. The government’s decision to remove incentives for electric vehicle purchases and the proposed tax changes may hinder the transition to electric vehicles.
While the number of electric vehicles in Finland has increased, there are concerns about the impact of tax changes on further electrification of the vehicle stock. It is crucial for the government to provide incentives to accelerate the electrification process and meet climate goals.
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