St Gallen’s new bonus-malus system hits EVs harder than pertrol vehicles

Switzerland applies a complex tax regime to electric vehicles. The federal government levies a 4 per cent automobile tax on the purchase of new vehicles, and authorities also impose a motor vehicle tax. Unlike Germany’s uniform vehicle tax, however, the cantons set and apply this tax individually rather than uniformly across the country. Some cantons grant full exemptions for electric cars, while others offer partial discounts.

The canton of St Gallen introduced a revised motor vehicle tax at the turn of the year and restructured it under a bonus-malus scheme. The new system aims to reward efficient vehicles and penalise inefficient ones, which the canton describes as ‘technology-neutral.’ Unlike under the previous regime, the authorities now also levy the tax on electric vehicles.

Critics argue that the canton has made significant errors in implementing the reform, also referred to as the road traffic levy. The authorities calculate the tax based on vehicle weight and engine output. They grant a bonus to energy-efficient vehicles – primarily electric cars – while they impose a malus, or surcharge, on owners of inefficient models.

The issue lies in the fact that, due to their batteries, electric vehicles are significantly heavier than comparable internal combustion engine vehicles. They also typically require higher engine power than petrol or diesel cars. As these are the key criteria for calculating the motor vehicle tax, EV owners are at a disadvantage, facing higher base rates.

The canton of St Gallen attempted to offset this disadvantage with a bonus for energy-efficient vehicles. However, this bonus is only valid for four years. As a result, the tax for most electric vehicles will become more expensive than for their petrol and diesel counterparts after this period.

Outraged EV drivers

Swiss newspapers report that EV drivers are furious. “I feel cheated,” one driver told the St. Galler Tagblatt. Another criticises: “The St Gallen government is not taking climate change seriously.” The Green Liberal Party (GLP) argues that if a conventional petrol car remains cheaper in the long run than an electric vehicle, the canton is undermining its own climate goals.

Two calculations by the St. Galler Tagblatt highlight the problem: a small petrol-powered VW Golf incurs 346 Swiss francs in taxes. The comparable electric model, the VW ID.3, costs 363 Swiss francs despite a 25 percent bonus—and will become significantly more expensive after four years. In the case of the Fiat 500, the electric version initially benefits from the highest efficiency category, costing 161 Swiss francs compared to 267 Swiss francs for the hybrid version. However, after four years, the tax rises to 322 Swiss francs, surpassing that of the hybrid.

Incidentally, electric vehicles have so far been completely exempt from motor vehicle tax in most cantons. This makes the situation in St Gallen seem even more unjust—EV drivers are now asking why they often have to pay more than petrol car owners, while in other regions, the tax is waived entirely.

tagesanzeiger.ch, blick.ch (both in German)