Finnish government plans to tax electric cars more heavily

Published 15 March 2024
- By Editorial Staff
Riikka Purra wants more tax increases to deal with the deteriorating economy.

Electric cars may be taxed more in Finland in the future, according to Finance Minister Riikka Purra. Taxes on products with high levels of sugar, trans fats and salt could also be increased.

In mid-April, the Finnish government will negotiate the budget framework for the next few years, which is expected to be difficult. Cuts of around 6 billion euros were agreed last spring, but further measures are needed. This is partly because economic growth is subdued, government debt continues to rise, and Finland is also at risk of breaching EU budget rules. The central government budget deficit is expected to exceed 12 billion euros this year.

The general government deficit is already above the EU’s 3% limit, and government debt is approaching 80% of GDP, according to Purra. One measure is to review the taxation of electricity, especially electric vehicles.

– The taxation of electricity needs to be reviewed, and this also affects the taxation of vehicles and transport. Those who drive electric cars will be taxed more in the future, she said at a seminar organized by the Finnish Taxpayers’ Association on Wednesday, according to national broadcaster Yle.

Sugar and trans fats

Other tax increases may also be considered, as they cannot be avoided despite the cuts. However, they do not think it makes sense to tax work more, as they want more people to work in Finland.

– A higher tax on unhealthy food is a better idea, says Purra. Health taxes or sugar taxes could play their own role, along with taxes on nicotine products and alcohol. Trans fats, salt and sugar are overtaxed compared to alcohol and tobacco.