Photographer: Daniel Acker/Bloomberg

Soon, Cars in Denmark Will Only Be Taxed at 100%

Copenhagen’s reputation as a cyclists’ paradise isn’t just due to a lack of hills: Registration duties of up to 180 percent 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 Tuesday, the tax rate is to be lowered dramatically -- to just 100 percent.

The initiative is part of efforts by Prime Minister Lars Lokke Rasmussen’s center-right government to expand the labor 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 $34,000. That compares with $21,500 in the car maker’s home of Germany and as little as $18,900 in nearby Poland.

A basic Porsche 911 Carrera sports car will set you back as much as a one-bedroom apartment in the capital -- $306,600 versus $117,900 in Germany.

To the delight of motorists, the government has published a list of potential savings, should its plan be approved by parliament. It shows savings of around 7 percent (or $3,240) for a Golf and of as much as 12.1 percent ($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’s "not fair that we, living in one of the wealthiest countries in the world, are driving worse cars than our neighbors 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 doesn’t 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 (ECVs).

The government did not provide estimates on how much a Carrera will cost, should its plans be approved by parliament.

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