Belgian economists argue ‘EV tax benefits too advantageous’

Taxes on EVs should be reviewed soon. If not, the Belgian state will miss out on €1,5 billion yearly tax revenues by 2030. So argue economists Bruno De Borger and Stef Proost, attached to the universities of Antwerp and Leuven, respectively.

After all, EVs also create congestion costs, and by taxing them less, they indirectly cause a creeping increase in other taxes, such as VAT and income taxes. That’s not fair, both transport experts claim. They propose to tax all cars – including EVs – for the kilometers they actually do, with a ‘congestion charge per km’, and for fossil fuels, a ‘climate charge’ on top of that.

Compensating lesser tax revenues

In the newspapers Het Belang van Limburg and Het Laatste Nieuws, they point to a study by Transport & Mobility Leuven, stating the share of EVs will rise to 65% in Brussels, 32% in Flanders, and 27% in Wallonia by the year 2030.

As a result, tax revenue – those with an EV do not have to pay road tax or registration fees – will fall by more than 1,5 billion euros yearly, and traffic jams will increase, as the professors predict.

EV drivers tend to drive more kilometers, which adds to the pressure on road infrastructure and traffic jams. Without reform of user taxes, the lesser state revenues, as electric ones replace more ICE cars, have to be covered by increased other taxes, such as VAT and income taxes. De Borger and Proost, therefore, advocate a reform of car use taxes that considers the actual costs of each trip, regardless of the car used.

Kilometer charge

In their proposal, they defend introducing a kilometer charge – still a taboo – for privately owned EVs and splitting the current user taxes for gasoline and diesel cars into a fuel tax (climate charge) and a kilometer charge (congestion charge).

In their four-step plan, they also opt for differentiating the km charges by location and time in a so-called ‘smart kilometer tax’. That would be higher in cities during rush hours and lower in rural areas and off-peak hours. According to the plan’s authors, motorists will not lose out in net terms.

Company cars mostly EV

They also think the financial rules for company cars should be adjusted. “Company cars, even if fully electric, are a misnomer for our mobility policy because they subsidize car use,” they say.

Almost one in two newly registered cars in Belgium is electrified, says car importers federation Febiac. More than nine in ten of those BEVs and plug-in hybrids are company cars, with tax deduction benefits playing a decisive role as an alternative for increased wages.

In late September, the Flemish government also announced a temporary and degressive premium for purchasing new and second-hand zero-emission cars. A premium of 5 000 euros for new vehicles and 3 000 euros for second-hand vehicles will start in 2024. The premium will be valid for three years, dropping annually by 1 000 euros for new vehicles and 500 euros for second-hand vehicles.


Ready to join the conversation?

You must be an active subscriber to leave a comment.

Subscribe Today

You Might Also Like

%d bloggers like this: