Switzerland is considering several options to tax electric cars due to revenue losses compared to traditional vehicles. These measures have raised some concerns.
Since the beginning of 2024, Switzerland has been taking steps to address the revenue gap caused by electric cars. Specifically, to counter the fact that they generate less revenue for the Confederation compared to traditional vehicles. The tax exemption that battery-powered vehicles enjoyed since 1997 was abolished on January 1st, and replaced with a 4% import tax on all vehicles. As electric vehicles continue to gain traction, albeit slightly less than anticipated, new ideas are emerging to further tax EVs. According to 20 Minutes, the revenue loss from fuel tax amounts to 300 million euros per year, prompting the need to balance the books.
One proposal being considered by the Swiss Federal Roads Office is to directly tax the energy used, either in kilowatt-hours (kWh) charged into the vehicle or by taxing the kilometers traveled. While these ideas may seem ideal in theory, they come with their own set of challenges. Implementing a tax on energy consumption or kilometers traveled raises complex issues and may be difficult to enforce.
The implementation of such taxes in France based on the Swiss model seems distant for now as these proposals face obstacles. Taxing kilowatt-hours is feasible at public charging stations, but poses challenges for home charging. The installation of controlled meters would be required, a task that Switzerland is not yet prepared for, although the Energy Strategy 2050 plans to replace current meters with smart meters by 2027. Additionally, Switzerland’s proximity to neighboring countries like France, Italy, Germany, Austria, and Liechtenstein, where residents could opt for cheaper charging options, presents another hurdle.
The possibility of a kilometer-based tax also raises concerns, particularly in relation to international travel and data privacy issues associated with GPS tracking. A consultation scheduled for early 2025 in Switzerland aims to further evaluate the feasibility of these ideas.