Bonus–malus system for new vehicles

The Government is further gearing up climate efforts. New green vehicles with low emissions of carbon dioxide will qualify for a bonus at purchase, while new vehicles with high emissions of carbon dioxide will be taxed at a higher rate for the first three years. This is proposed in a memorandum referred for comment by the Ministry of Finance today. The proposal is part of an agreement between the government parties and the Left Party ahead of the Budget Bill for 2018.

The transport sector is responsible for one third of emissions in Sweden. The Government has recently submitted a proposal to the Riksdag to reduce transport emissions by 70 per cent by 2030, compared with 2010. To reach that goal, ambitious measures are required. The aim of the bonus–malus system is to increase the proportion of green vehicles and help achieve the objective of a fossil-free vehicle fleet. The vehicles that will be affected by the new system are cars, vans and light buses.

“Last week we presented a proposal called ‘fuel exchange’, to move towards more renewable fuels. We are now moving forward with this bonus–malus system to achieve a change in the sale of new vehicles. This system is important for increasing the number of green vehicles in Sweden,” says Minister for Finance Magdalena Andersson.

“The proposal is part of the Government’s proactive policy to reduce emissions in the transport sector. Now that we have a high level of new vehicle sales, it is important to have powerful policy instruments to steer in the right direction. The bonus–malus system will ensure that it is easy to make the right choice when buying a vehicle,” says Minister for the Environment Karolina Skog.

The memorandum includes the following proposals:

  • Vehicles that emit zero carbon dioxide will qualify for the maximum bonus of SEK 60 000. Vehicles that emit a maximum of 60 grams of carbon dioxide will qualify for the minimum bonus of SEK 7 500. Vehicles that run on gas will qualify for a minimum bonus of SEK 7 500.
  • An increase in vehicle tax (malus) is proposed during the first three years for light vehicles that run on petrol or diesel. There will be no increase in vehicle tax for vehicles that can run on ethanol or gases other than liquefied petroleum gas.
  • For vehicles not covered by the bonus–malus system, the limit for when the carbon dioxide component of vehicle tax is charged is reduced to what a vehicle emits in carbon dioxide per kilometre in mixed driving above 95 grams, which means a vehicle tax increase for the vast majority.
  • It is proposed that the environmental supplement for vehicles that run on diesel and meet the Euro 6 emission requirements be retained and the five-year vehicle tax exemption abolished.
  • Vehicle tax for motorcycles will increase from SEK 180 to SEK 360 per tax year.
  • Vehicle tax for cars, vans and light buses in the weight-based system is to be adjusted as a consequence of vehicle tax being raised in the carbon dioxide based system.

Development in the area is rapid and it will therefore be important to conduct an early evaluation of the proposal. The final date for comment is 19 April 2017. The Ministry of Finance will shortly present a proposal to amend the calculation of car benefit in light of the bonus–malus system.