Cars set to come back in cyclists' paradise

The Danish government has proposed to lower the tax rate of cars dramatically - from up to 180 per cent to just 100 per cent

High registration duties for cars have contributed to cycling becoming a popular way to get around in Denmark.
High registration duties for cars have contributed to cycling becoming a popular way to get around in Denmark.PHOTO: COPENHAGENMEDIACENTER.COM

Copenhagen's reputation as a cyclists' paradise is not just due to a lack of hills: Registration duties of up to 180 per cent mean Denmark is one of the most expensive countries in which to buy a new car.

That may be about to change.

Under proposals unveiled on Tuesday, the tax rate is to be lowered dramatically - to just 100 per cent.

The initiative is part of efforts by Prime Minister Lars Lokke Rasmussen's centre-right government to expand the labour force by making a monthly salary more attractive.

Right now, the cheapest version of Volkswagen's popular Golf hatchback, the 85-horse power 1.0 TSI trendline, is advertised on the carmaker's Danish website with a starting price of almost US$34,000 (S$46,200).

That compares with US$21,500 in the carmaker's home of Germany and as little as US$18,900 in nearby Poland. (In Singapore, a higher- grade 105bhp Golf 1.4TSI retails for $99,900.)

A basic Porsche 911 Carrera sports car will set you back by as much as a one-bedroom apartment in the capital - US$306,600 versus US$117,900 in Germany (and from about $497,000 in Singapore).

To the delight of motorists, the Danish government has published a list of potential savings, should its plan be approved by parliament.

It shows savings of around 7 per cent (or US$3,240) for a Golf and of as much as 12.1 per cent (US$8,900) for the Passat, a family saloon.

"We will still have some of the highest car prices," Economy Minister Simon Emil Ammitzboll told a press conference in Copenhagen on Tuesday.

At the same time, it is "not fair that we, living in one of the wealthiest countries in the world, are driving worse cars than our neighbours in Sweden and Germany".

Denmark started raising import duties on cars at the start of the 20th century and hiked them significantly after World War II, and again after the oil crisis of the early 1970s.

It was an easy target for feeding the state's coffers - Denmark does not have a car industry of its own.

Whereas previous governments had opted to apply different duties, depending on how much the cars pollute, the current administration had decided to phase out tax breaks on electric cars, citing budget constraints and the desire to level the playing field.

That decision was delayed in June amid a dramatic drop in sales of Electrically Chargeable Vehicles.


A version of this article appeared in the print edition of The Straits Times on September 02, 2017, with the headline 'Cars set to come back in cyclists' paradise'. Subscribe