Electric Car Shift Drains Fuel Taxes in Some Countries

Governments around the world have long encouraged motorists to buy electric cars. Now they are starting to grapple with a consequence of the green drive: dwindling income from fuel taxes, the Wall Street Journal reported. Several countries have sought to phase out gasoline and diesel cars by offering tax and other incentives to drivers who buy new electric vehicles, part of broader efforts to cut carbon emissions. But in places where more EVs are hitting the road, income from fuel taxes, which often accounts for a significant chunk of public revenue, is falling. In Norway, home to the world’s highest electric vehicle uptake rate, lawmakers have scrapped tax breaks on electric cars as they try to plug a hole in tax revenue. In the U.K., where fuel taxes account for some 7 percent of annual income, lawmakers are studying a potential new levy based on how much people drive instead. Electric vehicle uptake remains low in all but a few of the world’s wealthiest countries, and the tapering of tax income is expected to be gradual. Still, the conundrum highlights the costs and challenges of decarbonizing the wider economy, with cutting emissions from transport seen as key to hitting global climate goals. How early-adopter countries handle the transition will likely be closely watched in places like the U.S., where lawmakers hope to boost electric vehicle sales, partly through tax credits. Read more.

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