With the global emissions crisis that is ongoing, people are looking for solutions, and the idea of a non-fossil fuel car is a great one. Cars and transportation are one of the leading causes of climate change, so making that part of our lives green would put us a long way forward. In the last few years, electric vehicles have started to penetrate the industry, with massive companies like Tesla leading the way. In the coming decades, we will likely see a mass exodus of gas cars into alternatives like EV’s, but governments around the globe have looked into ways of incentivizing people to make the switch now. The idea of an incentive is good, but it can backfire if that incentive ends up hurting you.
Some European countries have tried to incentivize switching to electric cars by voiding fuel tax as there isn’t any fuel being used to begin with. Taxes are a good way to lure someone in because that saves them more money in the long run, but taxes are necessary for a government to thrive, and these countries are finding that out the hard way. For example, Norway sold tons of electric cars in the past year, but they also saw a 40 percent reduction in car-related taxes, which is limiting government spending. The same can be said for the United Kingdom, who rely on car-related taxes for 7 percent of their income, and that number is being cut now due to the switch. Obviously, countries don’t want people to switch back to gas cars, so instead they’ve been trying to redo their incentives into something new. Something that doesn’t affect them in a negative way, like road pricing, which is a system that Norway is looking into at the moment. Do you think these tax incentives are smart?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.