EY calls for green tax breaks for electric vehicles

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 Brussels, 22 September– A recent study by EY shows that electric vehicles could be a spearhead for a new economic growth sector. They could lead to the development of a new market with significant opportunities and job potential. The government could bring this market into full development in a relatively short time by implementing powerful, targeted tax measures.

At a heavily attended workshop – ‘Drive into the Future’ ¬– on the future perspectives of electric vehicles, EY appealed for measures in the near future that would stimulate the growth of the electric vehicle market. An increase in tax deductions for energy-efficient vehicles in combination with other tax incentives is one of the options presented by EY. Policy makers across the political spectrum agree that more incentives must come for innovation, and these tax measures fit this vision perfectly.

In the meantime, EY continues to set a good example by further increasing the percentage of electric vehicles in its total fleet.

“The electric vehicle sector is gradually maturing. It is becoming ever clearer that this sector offers important market opportunities, but also ecological and social incentives to create jobs. It comes down to seizing these opportunities. Tax incentives are essential to this” says Rudi Braes, Managing Partner of EY Belgium, who at the same time launched an appeal for the inclusion of such policy measures in the near future.

EY notes that Belgium created a framework in 2009 that foresees a tax credit for natural persons for the purchase of an electric vehicle as well as for the installation of a charging station. For companies, 120% deductibility of the costs associated with an electric vehicle was included, as well as increased deductions for investments in charging infrastructure. Given the fact that electric vehicles are entering the market more slowly than initially foreseen, and that these measures will end in 2012 (with the exception of the 120% deductibility), an extension of this deadline, as well as an increase in the percentage of deductibility, are certainly recommended. The purchase of an electric vehicle entails an additional cost of between 10,000 € and 15,000 €. The temporary tax breaks only partially compensate for this additional cost. Moreover, the net cost to a company for the use of an electric or hybrid vehicle is also significantly higher than the cost of a traditional vehicle with internal combustion motor. Since electricity as energy product is subject to the excise duty regulations in Belgium, operators of charging infrastructure will also be confronted with serious administrative obligations and fiscal risks. To avoid such additional administrative burdens, a change to the regulations is in order.

“To force a real breakthrough for the electric vehicle – and the social, ecological and economic opportunities that go with it – certain measures are essential" states Rudi Braes. “Belgium, with its dense road network and short distances between cities, can in fact play a pioneering role in this growth sector. If all government institutions work consistently within their areas of responsibility on well thought-out incentives, over time the electric vehicle can become a fully-fledged alternative to the traditional vehicle”, says Rudi Braes. “In anticipation of this, we will continue to play a leading role by systematically using more electric vehicles in our own vehicle fleet, despite the additional costs this presently entails”.

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