Dutch tax cuts for electric cars benefit the rich
A large amount of the tax cuts for electric cars in the Netherlands (totalling 700 million euro in 2018) were accorded to rich people. Almost half of the 25.000 fully electric cars sold last year were Teslas and Jaguars with a catalogue price between 80.000 and 120.000 euro.
Last year the sales of Tesla, for example, rose 260% and the result is that the subsidies for electric cars were several hundreds of millions higher than predicted, all at the cost of the common taxpayer, who pays more for his (fossil) fuel to pay this bill.
The government supposed that 11.000 electric cars would be bought in 2018, because of the subsidies it resulted in more than twice this figure.
According to the Dutch authorities, all cars sold in the Netherlands in 2030 should be electric. The increase in electric sales is positive in that light. However, once again the government has underestimated the sensibility of the Dutch taxpayer for ‘fiscal injustice’.
The government estimated the average price of the electric cars to be sold in 2018 at 43.000 euro. In fact, the average price of more than double the originally estimated amount was 63.000 euro. At these prices, you can hardly call them ‘middle class cars’ anymore.
Most of these expensive electric cars are bought by (mostly small) companies to obtain tax cuts. A company car driver pays only 4% ‘bijtelling’, as the additional taxis called in the Netherlands, during the first 5 years he drives electric. The same ‘bijtelling’ is 22% for cars on fossil fuels, like petrol or diesel.
The more expensive the car and the higher the income of its owner/driver, the higher is the tax cut. Apart from the tax cut for the ‘bijtelling’, electric car drivers pay fewer other taxes and can also benefit from environmental subsidies.
People having bought a Tesla Model S in the Netherlands last year (prices starting at 92.000 euro), the best-selling electric car in 2018, could recuperate 73.120 euro.
These excesses won’t be possible anymore from now on. The 4% rule is from now on only valid for cars costing less than 50.000 euro. For the exceeding amount, the 22% rule is now applicable. Still there are politicians, like MP Pieter Omtzigt (CDA), who find these middle class electric cars over-subsidized.
The miscalculation of the governmental cabinet is strongly resembling the ‘Mitsubishi Outlander debacle’ in 2013-2015. This plug-in SUV hybrid was bought by 10.000s in those years because of the tax cuts.
In a scathing report the Dutch watchdog for public finance (Algemene Rekenkamer) concluded that subsidies for electric driving were very ineffectively deployed at the time. Apparently, history is repeating itself.