Switzerland pulls the plug on tax breaks for electric vehicles

In a controversial move, Switzerland has decided to tax electric cars in the same way it does for gas guzzlers, saying that special tax exemptions are no longer necessary.  

The Swiss Federal Council announced the news yesterday, stating that it is pulling the plug on the country’s 4% import duty exemption, with the decision going into effect on January 1, 2024. Although the exemption has been in place in Switzerland since 1997,  the government now says that it is “no longer necessary” due to the heavy rates of EV adoption within the country. 

“The Federal Council takes the view that the exemption from duty as an incentive is no longer necessary, given the sharp rise in the share of e-vehicles in total car imports and the convergence of prices,” the council states in the press release.

The move hopes to redress “shortfalls” in tax receipts, according to the statement, and to ensure funding for public transport and highways. Removing the exemption is expected to bring an additional tax revenue of 2 billion Swiss francs ($2.2 billion) to 3 billion francs per year. Annual imports of EVs to Switzerland grew sixfold from 2018 to 2022 to reach 45,000 units last year, according to the statement, with EVs set to be 23% of all car imports. 

According to Bloomberg, Swiss car importers are upset about the new decision, saying it was “a black day for electric mobility in Switzerland.” Peter Gruenenfelder, the head of car importers association Auto-Suisse, told the paper that the new measures are “in stark contrast to the CO2 reduction targets for new vehicles set by the same government.”

The European Union aims to bring car emissions down by 55% from 2021 levels by 2030, and to zero by 2035. To help offset the higher upfront price of electric cars, 21 of the 27 EU member states offer tax breaks when buying an EV, according to the European Automobile Manufacturers’ Association (ACEA). Twenty countries also offer cash to help with the purchase, in addition to other perks such as parking and the right to drive in bus lanes. Meanwhile Germany – Europe’s largest polluter – is pulling back on subsidies for electric vehicles as more and more people are buying them, saying the subsidy program is no longer at a sustainable level.

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