Norway proposes luxury car tax for electric vehicles

The Norwegian Government is looking to introduce a tax on expensive electric vehicles.

Currently the world leader in EV uptake, Reuters reports 77.5 per cent of all new cars sold in Norway throughout September were fully-electric, up from 61.5 per cent 12 months prior.

While EV buyers are currently exempt from taxes imposed on internal combustion engined vehicles, the country's new Labour Government – which won last month's election – is proposing a 25 per cent tax on EVs over 600,000 Krones (AU$96,000).

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Similar to the Australian Luxury Car Tax – set at $79,659 for fuel-efficient cars and $69,152 for other vehicles – the Norwegian charge will only apply to the retail value of a vehicle and be added to the cost beyond the threshold.

The Norwegian Labour Party's tax policy spokesman, Svein Roald Hansen, told Reuters the current exemptions weren't designed to last forever and will need to be adjusted in the future.

"It is a subsidy. And... the more expensive the car is, the bigger the subsidy," said Hansen.

"We have in the last couple of years received a lot of new models...there is plenty to choose from for those who still want to buy a car while there is a VAT (value-added tax) exemption."

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With EVs now making up more than three-quarters of vehicle sales in Norway, it's the Tesla Model Y which leads the charge with 19.8 per cent of the total new car market, followed by the Model 3 at 12.3 per cent and Skoda's Enyaq SUV in third, on just 4.4 per cent.

A working paper from the International Monetary Fund earlier this year estimated the exemption was costing the Norwegian Government up to 19.2 billion Krone (AU$3.04bn), an average of around 250,000 Krone (AU$40,000) for every EV sold.