Friday, December 04, 2009

Denmark's 200% Car Tax: Crazy and Crazier

NY Times -- Is saving $40,000 at the showroom enough to get drivers behind the wheel of an electric car? With a program in the works to add easy access to charging stations, Denmark is about to find out. The country imposes a punitive tax of about 200% on new cars, so a vehicle that would cost $20,000 in the United States costs $60,000 here. For a quarter-century, electric cars have been exempt from that tax. But the models on the market were so limited in their capabilities that only 497 of them are registered in the entire country.

For all their potential, electric cars have always been the subject of more talk than action, and only a handful are on the road in Denmark. But now the biggest Danish power company is working with a Silicon Valley start-up in a $100 million effort to wire the country with charging poles as well as service stations that can change out batteries in minutes.

The government offers a minimum $40,000 tax break on each new electric car — and free parking in downtown Copenhagen. But even in Denmark, one of the most environmentally conscious nations in the world, skepticism abounds. It is not clear that car buyers can be persuaded to make the switch.

“There is a psychological barrier for consumers when their car is dependent on a battery station,” warned Henrik Lund, a professor of energy planning at Aalborg University. “It’s risky.”

MP: Two amazing points: First, a 200% tax on cars in Denmark? That seems crazy. Second, most car buyers in Denmark actually pay the 200% tax and buy a regular car when they could avoid it by buying an electric car? That seems even crazier. I always thought that if you subsidize something you get more of it. Not in Denmark I guess.


Thanks to Stuart Anderson.

Update: Denmark, which hosts the UN climate change conference next week, is often seen as one of the most environmentally friendly countries in the world. This reputation is mostly undeserved, but Denmark is doing its best to catch up.

MP: Undeserved is maybe right, since many seem perfectly willing to pass up $40,000 in green subsidies and tax savings?

24 Comments:

At 12/04/2009 5:44 PM, Blogger Jason Woertink said...

I wonder how car sales are doing just across the border.

 
At 12/04/2009 6:05 PM, Blogger randian said...

If Danes actually pay that tax, it shows you how much they value personal mobility vs state-restricted mobility aka public transit.

In some countries business vehicles aren't subject to punitive excise taxes. Everybody is a cabbie. I wonder if that's the case in Denmark.

 
At 12/04/2009 6:28 PM, Blogger JMG said...

No no, I'm sure Danes are not crazy. Their government taxes an indispensable item as opposed to a tax-free toy. If and when electric cars cease to be toys, they'll be heavily taxed too.

 
At 12/04/2009 6:44 PM, Anonymous Dr. T said...

Denmark is so small one would think that they'd all ride Segways.

 
At 12/04/2009 6:54 PM, Anonymous Anonymous said...

Forgive me if I'm missing some sarcasm somewhere, but why are you assuming there is not less vehicle ownership in Denmark because of such a ridiculous tax?

Without looking at any numbers, I would guarantee that they have a lower per capita number of cars than any similar area (density, income, etc) that doesn't impose such a tax.

I'm also guessing that Ferrari isn't conducting any extensive marketing campaigns their either.

 
At 12/04/2009 7:36 PM, Anonymous Anonymous said...

when i last looked into this i recall the tax on cars as 20%.bad enough.

 
At 12/04/2009 7:40 PM, Blogger juandos said...

Typical leftist politicos, it makes no difference if you are in the US or Denmark...

So if environmental issues are at the core of a society, people would focus on POLLUTING LESS rather than PAYING MORE when the extra money isn't spent on cleaning up the environment anyway. THAT is the one truth many Danish politicians won't discuss 'cause they know it's a shameful fact that environmental taxes have been spent on many things that have nothing to do with cleaning up...

Denmark: not as green as you thought

 
At 12/04/2009 7:53 PM, Blogger Craig said...

Of course you get less of it. Why do you think so many Danes ride bicycles?

 
At 12/04/2009 9:04 PM, Anonymous Anonymous said...

I suspect there is not a single auto manufacturer in Denmark, along with those jobs.

 
At 12/04/2009 10:22 PM, Blogger OA said...

I heard a commentator on CNBC world say Europe has never gotten back to it's pre 1970's oil crisis usage. I found a website somewhere with regional usage that confirmed that. It's really close now so it will probably go over soon, but still a pretty surprising stat.

 
At 12/04/2009 11:36 PM, Blogger Colin said...

This comment has been removed by the author.

 
At 12/04/2009 11:37 PM, Blogger Colin said...

This is worth remembering next time some European tells you how much more virtuous they are than Americans. They aren't, they just can't afford to live like us, due to lower incomes and insane prices.

A Dutch friend of mine worked in NYC for a couple of years. While there he bought a Saab and imported it back to Holland, thereby escaping punishing taxes on cars he would have to pay back home. Many of his European colleagues at the office he was at did the same.

 
At 12/04/2009 11:47 PM, Anonymous Anonymous said...

In Finland, Norway and some other countries traffic fines are based on your income resulting in fines that can be in the tens of thousands of dollars.

Now, that's crazy.

 
At 12/05/2009 3:34 AM, Blogger bobble said...

hey i'm not against bare knuckles capitalism. after all, i still live in the USA!

but you have to consider that, according to forbes, the danes are the happiest people in the world. apparently all your huffing and puffing about taxes and socialism means zero to them.

by the way, the USA didn't make the top ten of happiest countries.

 
At 12/05/2009 7:37 AM, Anonymous Lyle said...

The Finns and Norweigans evidently believe in relative uniformity of punishment for traffic offenses. In other words a $100 fine is a big differernce if you are making the minimum wage or are making $100,000,000 a year. So they believe that the fine should be a percentage of income to make the pain the same. (A different kind of Justice than ours but ...)
Note that Singapore (150%) also charges high car taxes and as noted both Singapore and Denmark have to import all cars.
Boble raises the question of happiness and notes that the surveys of Scandinavia show it to be happier than the us (possibly because its easier to keep up with the Olsafsons. )
Its sort of different strokes for different folks, you wont get rich easily there, but you won't starve either. The people have chosen social democracy as their system and like the result. Their choice is less uncertainty for less upside.

 
At 12/05/2009 10:30 AM, Anonymous gettingrational said...

Global Warming enthusiasts can get their mojo back on with this female special situations team in Copenhagen. Yes, this team will inspire many passionate global warming reports!

Thanks be to Drudge

 
At 12/05/2009 10:34 AM, Anonymous gettingrational said...

This is the link to the Copenhagen Special Situations Team

 
At 12/05/2009 12:32 PM, Anonymous Anonymous said...

... they believe that the fine should be a percentage of income to make the pain the same. (A different kind of Justice than ours but ...)

A thousand ways to skin the marxist cat. Tell me, following this logic, should food, shelter and everything else be priced as a percent of your income? I thought that equality before the law was a bedrock principle. Socialism is a disease.

 
At 12/05/2009 12:46 PM, Anonymous Anonymous said...

...the danes are the happiest people in the world.

Denmark Feels the Pinch as Young Workers Flee to Lands of Lower Taxes

The New York Times

 
At 12/05/2009 8:35 PM, Blogger stevedp86 said...

I lived in Copenhagen and the bike network throughout the city is extensive and that is how most people travel. It's a relatively small city so it's not a problem. They also have an efficient Metro and you can bring bikes on it (as well as buses etc...).

Now for the taxes....200% car tax I would definitely be riding a bike. They also have a 25% VAT tax and higher taxes on "luxury" items.

Of course they have "free" healthcare (I had it too and I was only there for a year!), schooling etc...

You can be a Dane and go work in London, make a ton of money then come back to the nanny state to retire.

 
At 12/05/2009 10:17 PM, Blogger randian said...

I lived in Copenhagen and the bike network throughout the city is extensive and that is how most people travel. It's a relatively small city so it's not a problem.

Copenhagen's winters are pretty rough. I wouldn't want to ride a bike through that kind of cold and ice.

If Danes want to turn themselves into poor third-worlders, more power to them. I still think it's stupid.

 
At 12/07/2009 4:28 PM, Blogger stevedp86 said...

randian - rain or snow they were riding their bikes.

the cost of living is so high there, riding a bike is the most economical option--especially for students.

 
At 12/07/2009 9:54 PM, Anonymous Anonymous said...

If the promotion of electric vehicles is to save energy, then it won't work. The transfer of generator motion to electricity to vehicle motion is usually ineffecient (unless it comes from nuclear, geothermal or hydro power).

 
At 12/08/2009 8:12 AM, Anonymous Anonymous said...

You are a little wrong about the tax - there are two different levels used in the calculation.
For the first approx. 15000$ the tax is 105% and for the rest it is 180%. In addition, you get deductions on the tax for safety and environmental related features and for each kilometer the car goes above 16 km/l (18 for diesel). The deduction is around 800$ per ekstra km/l. As an example, take the new VW polo bluemotion, going above 30 km/l this will deduce the tax with 9600$ + ekstra deductions for stuff like PDF, ABS, ESP and more than two airbags - say a few thousand dollars.

For a regular VW Polo 1.9 TDI (not the bluemotion - which has not launched in Denmark yet) the price compared to Germany (which has, as far as I know, no tax on cars) is about 55% higher. For less fuel efficient cars this number will be higher - but it is still way less than 200%.

There is, however, an additional tax paid every year. This is normally between 200 and 700$ for a regular family car - again depending on fuel consumption.

 

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