Billion-dollar reduction gives car owners a few hundred kronor

A few hundred kronor in lower fuel costs per year for those who drive a car and the risk of worse air quality in urban areas. These are some effects of the government's and SD's announced reductions in taxes on diesel and petrol, which are expected to cost the state treasury 5.6 billion kronor in reduced revenues per year when they are fully implemented.

» Updated: September 14 2024

» Published: September 08 2024

Billion-dollar reduction gives car owners a few hundred kronor
Photo: Lars Schröder/TT

It emerges from the government's now-distributed memorandum on the proposals, whose main features were presented at a press conference on August 27. It was also then that the government and the Sweden Democrats announced that they would change their stance on the reduction obligation and increase it. This means that more biofuels than today will be blended into gasoline and diesel from next summer.

Some of the announced tax cuts will cover the price increase that is expected to occur due to the increased reduction obligation.

In the memorandum from the Ministry of Finance, it is stated, as the government previously said, that carbon dioxide emissions will increase by 0.9 million tons in total by 2030 due to the tax cuts. However, the increased reduction obligation will make the increase in emissions smaller than that.

The Ministry of Finance writes that emissions of nitrogen oxides, which are mainly generated by diesel vehicles, will increase as a result of the tax cuts, as they are expected to increase consumption. This will make it more difficult to achieve the goals for reduced emissions of nitrogen oxides by 2030, as well as EU requirements for reduced air pollution and cleaner air.

"It also implies an increased risk of exceeding environmental quality standards in urban areas, which may lead to demands for further measures to reduce air pollution levels," the department writes in the memorandum.

A person who drives a diesel car privately 1,400 miles per year is estimated to have their fuel costs reduced by SEK 150 per year.

A person who drives 900 miles per year and fills up with gasoline will have their costs reduced by SEK 240 per year.

For companies with trucks and buses, fuel costs can be reduced by SEK 7,500 and SEK 3,400 per year, respectively.

In both cases, the cost can be reduced by an additional SEK 90 in 2026, compared to if the government had allowed fuel taxes to be written up with inflation.

In the long run, fully implemented, the tax cuts and abolition of inflation indexing are estimated to result in approximately SEK 5.6 billion in reduced tax revenues per year.

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By TTThis article has been altered and translated by Sweden Herald

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