Norway’s new car taxation falls short in providing environmental benefits

Hallstein Havåg
Hallstein Havåg
Nils Bøhmer

Publish date: September 30, 2016

The Norwegian government proposes new car and petrol taxation that will have absolutely no effect on the environment, says Bellona’s Director of Policy and Research Hallstein Havåg.

In the state budget, which will be presented next week, the Norwegian government will suggest the increase of the tax on diesel with 0,35 NOK (0,04 Euros) and the tax on petrol by 0,15 NOK (0,02 Euros). At the same time, the government intends to reduce annual tolls and one-time fees, and to increase the commuter deduction. Altogether, this will entail a duty relief of one billion Norwegian kroner (approximately 111,3 thousand Euros) for motorists, according to the Norwegian newspaper

Director of Policy and Research at the Bellona Foundation, Hallstein Havåg expressed disappointment at the small increases of the duties that became public through a leak of the budget.

– Such small changes themselves do not have any positive effect on the environment. If one adds a number of tax breaks that will at the end make the usage of private vehicles cheaper, this new transport policy becomes hostile to the environment, Havåg said.

Havåg does not believe Prime Minister Erna Solberg’s guarantee that the new car and petrol taxes will cut the yearly CO2 emissions by 200,000 tonnes.

– She says that there aren’t even calculations for lower toll fees and higher commuter deductions, Håvag points out.

Hidden tax cuts on cars

Havåg refers to a report by the Institute of Transport Economics, which was commissioned by the transport agencies, Avinor, and the Norwegian Environmental Agency. A substantial increase of fuel prices is needed to have an impact on people’s driving behaviour, which in turn is key to ensure a noticeable effect on the reduction of CO2 emissions from transportation.

– What the government in fact does is to secretly give motorists tax cuts in an election year. Venstre [social liberal party] and KrF [Christian democrat party] cannot approve this, Havåg argues.

If the government reduces the cost of driving a car that runs on fossil fuel, it also reduces the incentives to purchase a zero-emissions vehicle.

– This takes Norway in the wrong direction. Norway needs to cut its emissions from transport by at least 40% in the next 14 years. The government responds by making diesel and petrol cars cheaper to use.

Havåg believes that the new policy will lock people to their cars, which they will find difficult to sell in just a few years’ time.

– This week, a car convention is held in Paris, where many ground-breaking electric vehicles are presented. Opel disclosed that its Ampera-e will have a driving range of around 500 kilometres. This will have a greater impact on emissions from transport than the newest state budget of the government, says Havåg.

For the original article (Norwegian), see here.