Iceland plans to eliminate import taxes on clean energy vehicles next year. The tax removal will apply to electric, methane, and hydrogen-powered cars. At the same time, taxes will increase for fossil fuel vehicles.
The head of the Icelandic Vehicle Owners Association warns these changes will hit electric work vehicles hard. Runólfur Ólafsson says authorities are introducing new carbon emission assessments for these vehicles.
How will this affect electric vehicle prices? The changes come alongside reductions in direct purchase subsidies. The maximum subsidy drops from 900,000 Icelandic krónur to 500,000 next year.
Ólafsson states the tax adjustments might offset the lower subsidies. Electric vehicles may not become cheaper despite the tax removal. He notes all vehicles will face higher kilometer charges starting January 1.
The kilometer tax will increase by sixteen percent. Ólafsson argues this system favors owners of larger, heavier, and more energy-intensive vehicles. The government's clean energy push creates mixed signals for consumers.
Direct subsidies from Iceland's Energy Fund remain unaffected by the tax changes. The government appears to be shifting support from direct payments to tax incentives. This approach may disadvantage commercial vehicle owners who rely on electric work trucks.