Sin tax, what is the rate for electric cars in Brazil and Europe | Estadão Mobility | Electric Planet
3 min readA ACEA (European Automobile Manufacturers Association) issued a note on July 15 calling for an open trade policy on the continent. Indirectly, the coalition of 31 companies criticized the taxation that the European Parliament imposed on electric vehicles on July 4th. The tax for energy-powered cars produced in China varies by company and can be as high as 38.1% in Europe.
Brazil, in turn, included electric cars in the “Sin Tax” with the text of the tax reform. This group of products or activities will have a 26.5% tax for being “harmful to health or the environment”. The explanation would be that the lithium batteries in these vehicles are polluting.
Read too: The sin tax for those who are not sinners
Different times in Europe and Brazil
“The measure applied by the European Union aims to protect local industry. Exactly what Brazil is doing by increasing import taxes on electric cars. Chinese cars are cheaper and more technological, which appeals to consumers”, analyzes Leticia Micchelucci, a lawyer specializing in taxation.
However, Brazil and Europe are at different stages. In the old world, electric-powered cars are already widespread and there are European brands committed to 100% electric sales by 2030.
“Brazil does not have a single electric car produced on national soil and we are already discussing a similar taxation to countries that have penetration of more than 20% in sales and with local production”, says Davi Bertoncello, CEO of electric mobility startup Tupi .
The discussion of taxation should take place when there is already a minimum enabling market, as in Europe, which is very different from the Brazilian context.
Davi Bertoncello, CEO of Tupi
Does it make sense to include electric cars in the “Sin Tax”?
“From the point of view of reducing pollutant and carbon emissions into the environment, without a doubt, the electric car could not be considered a harmful good compared to the combustion model” analyzes Leticia.
Tupi’s CEO adds that Congress’ justification that batteries pollute is, at the very least, late. “When we thought about the first generation of batteries, they weren’t really recyclable, but today the world is in the fourth generation. Lithium batteries are 100% recyclable.”
Bertoncello reinforces that there are already companies capable of recycling batteries in the country. “Brazil does not recycle lithium batteries because they do not yet need recycling. An electric car will discard the battery in 15 years. The question here is not whether Brazil has already recycled, but whether Brazil has the capacity for people to recycle. And we have.”
So why are electric cars in the “Sin Tax”?
Bertoncello believes that the use of the sin tax is not linked to possible pollution from lithium batteries, but rather to protectionism by the national industry. “The discussion was heated due to the amount of Chinese car exports. After the United States began to impose disproportionate taxes on Chinese automobiles, Brazil and Mexico became the main countries in the world as destinations for these vehicles.”
At the same time, he states that “the collective understanding was that we would have a greater momentum for Flex Hybrids, however we have seen more and more Brazilians also interested in 100% electric”.
Leticia, in turn, highlights that the Federal Government’s National Green Mobility and Innovation Program (Mover) also played an important role in promoting the sale of electric vehicles.
However, the lawyer believes that “if electric cars are outside the selective tax, the development of the automotive industry in Brazil will increase and be encouraged. The production of combustion cars is not harmed as it still represents the option for the majority of Brazilian consumers”.
Currently, the tax burden for combustion cars is made up of IPI, ICMS, PIS and COFINS and varies according to the state where it is manufactured, the engine capacity and the fuel used. A combustion car pays between 24.7% and 35% in taxes in Brazil.
According to Leticia, “electric vehicles, with the increase in import taxes, are at a level of 25%. However, it tends to increase due to the planned gradual increase in import taxes until 2026, which is expected to reach 35%”, a value above that for fuel-powered vehicles.
The post Sin tax, what is the rate for electric cars in Brazil and Europe appeared first on Estadão Mobility.
https://mobilidade.estadao.com.br/planeta-eletrico/imposto-do-pecado-como-fica-a-taxa-para-carros-eletricos-no-brasil-e-europa/
Author: Fellipe.leite