As Germany plans to boost the demand for environmentally friendly cars, the talks on the matter can lead to a tax incentive strategy.
The German government is debating for some months now a plan to surge the sales of electric cars. Although the auto market in the country is the largest one in Europe, accounting for almost a quarter from the total auto sales volume in the region, the demand for electric cars have been quite weak so far. However, the officials set an optimistic target in this direction, planning to see around 1 million electric cars on German streets by 2020. The target can be viewed as a bold one, considering the fact that just over 30,000 of such environmentally friendly vehicles have been sold in the country. According to Bloomberg, recent talks around the subject are going towards a tax incentive plan.
Vice Chancellor Sigmar Gabriel wanted to assign about 2 billion euros (2.2 billion dollars) in cash rebates for the electric plan, pushing for about 5,000 euros per car until 2020. However, the Finance Minister Wolfgang Schaeuble opposed to the strategy, considering the financial implications for around 1 million asylum seekers. Therefore, tax incentives are emerging as a likely compromise, said to Bloomberg a person familiar with the talks. It is not clear yet whether any deal would consist only of tax breaks or combine the two approaches. “Cash rebates cost billions, which is hardly feasible in view of the budget situation,” Peter Ramsauer, a member of Merkel’s party bloc who chairs the German parliament’s economic affairs committee, said in an interview. In contrast, “making part of the purchase price tax-deductible is an incentive that can make sense,” said Ramsauer, a former transportation minister in Merkel’s administration.