Comment by netcan | Hacker News Reader

Comment by netcan | Hacker News Reader

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In one form or another, this is something electric car companies need to build into their expectations.

Petrol taxes (exempt by default), sales taxes, road taxes & such add up to a sizeable tax revenue source. In many places they are linked to road/transport budgets. The tax breaks that electrics have been getting were implemented when the segment was so small that it didn't matter. Once electrics reach double-digit market share, they are probably unsustainable. They will probably need to find a replacement for petrol tax too.

Rebranding these as "externality taxes" is well & good, but it doesn't change the fact that government departments need the revenue, externalites or not. Countries can easily afford to "subsidize" electric to get from 0.4% adoption to 4%, but 40% is almost out of the question.

Then there's the regressive tax problem. Yuppies in Copenhagen will be driving tax free Tesla 3s while single mothers pay thousands to drive a Peugeot 206. Many countries implement new-car promoting policies (eg emission tax) of all sorts which are regressive. I doubt this will kill subsidies in itself, but combined with budget holes...

TLDR - Tax breaks are for infant industries. Tesla is launching a mass market car. This is no longer an infant industry.

> Tax breaks are for infant industries.

I wish someone could tell that to agriculture or aviation or steel

Agreed, the subsidies that these industries receive distort the market. The question is whether the the electric car industry will follow in their footsteps in successfully defending their subsidies, or whether the subsidies will be rolled back.

Or big Oil.

> Rebranding these as "externality taxes" is well & good, but it doesn't change the fact that government departments need the revenue, externalites or not.

Well not every country charges 180% import taxes like Denmark but this comes with externalities as well.

Cars are so expensive that many people can't afford them (sales were 13x higher without the import tax that's a significant amount of cars not being purchased):

a) meaning poor people can't commute to work, limiting employment options to what is accessible by public transit or cycling

b) consumers are limited to shopping and domestic tourism accessible by transit/cycling

c) businesses that depend on delivery and shipping, or basic car travel, will have lower margins and less growth/employment

d) lower economic output means more dependency on gov social safety nets

e) Car companies can only sell a few already expensive electric cars, reducing economies of scale and R&D investment, further increasing the cost of electric cars and slowing their tech development

f) A big reduction in the surrounding support industries, fuel/electricity, car wash, gas stations, mechanics, car parts, etc

...but yes gov does need money, but the costs of doing so must be fully considered. Including measuring the ROI of various government agencies which this reduced economic output and greater dependency on social services are traded for.

> Once electrics reach double-digit market share, they are probably unsustainable. They will probably need to find a replacement for petrol tax too.

I agree. What form would such a tax take? You could tax tires, which is stupid because it encourages people to buy less safe long-life tires, or you could roll it into property tax, or a VAT, or grocery tax, etc. Even a part of a sales tax could make sense, since logistics for the supplier is included in the cost of the product anyway. Logistical infrastructure tax makes sense.

What is best practice here?

That tax could shift to a registration fee. In order for the EV to be licensed for road use, an annual registration fee could be applied, or increased if it already exists. Whether it is a flat fee or some other cost structure, it could be a suitable tax replacement.

Well…. the drop-in replacement for petrol tax would really be a per-km tax. Not the easiest to implement, but not impossible either.

I would think it would be a kWh tax...since actual mileage for an EV would vary based on local geography/traffic/weather etc in a similar fashion to MPG for ICE.

Registration tax.

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