Finnish vehicle stock less valuable than Sweden, Norway

A new study reveals that Finland’s stock of motor vehicles is distinctly less valuable than those of the benchmark countries Sweden and Norway, said a government press release.

The changes in motor vehicle taxation implemented in Finland in the years 2003, 2008 and 2012 do not appear to have any significant impact on the number of new cars nor are they reflected in the number of old cars removed from use.

Researchers at the Institute for Economic Research (VATT), the Labour Institute for Economic Research (PT), and the University of Berkeley have estimated the impacts of changes in the motor vehicle tax and fuel tax on the stocks of motor vehicles in Finland, Sweden, and Norway.

The researchers also examined the impacts of changes in motor vehicle tax on the properties of new cars and on the level of CO2 emissions. The second part of the study focused on the regional price impacts of the fuel tax reform implemented in 2012.

The results now published are the first of the comprehensive research programme, and they should be seen as being preliminary and of a descriptive kind.

The comparisons show that Finns are driving older and less valuable cars than Swedes and Norwegians but the 2003 motor vehicle tax reform had the effect of slightly narrowing this gap.

The changes in taxation appear to be reflected somewhat also in the CO2 emission levels of new cars, but these changes in the emissions are not great. However, the proportion of diesel-engine motor vehicles increased steeply in all three countries following the introduction of CO2-based taxes.

According to the study, the changes in motor vehicle taxation were reflected briefly before and after changes in the number of motor vehicles sold. Following the taxation reforms of 2003 and 2012 in Finland, changes were also noted, in the longer run, in the number of first-time registrations of motor vehicles, but it is unclear whether these changes were caused by the changes in motor-vehicle taxation.

Regarding fuel taxes, the study looked into the matter of whether the transfer of the increase in Finland’s fuel taxes in 2012 into consumer prices differed according to regional differences in income and wealth or population density.

The studies have been carried out as a part of the government’s 2017 Analysis, Assessment and Research Plan.