Finland to cut vehicle tax for older high-emission cars

The Finnish government plans to reduce the annual vehicle tax for petrol and diesel cars older than 10 years, with the relief totalling €10 million and averaging just €6 per car per year, according to a proposal now open for public consultation.

The measure, set to take effect in 2028, follows a similar €50 million tax cut introduced earlier for older, higher-emission vehicles. The Finnish Automotive Industry Association (Autoalan keskusliitto) argues the latest relief will have negligible climate impact, as the savings are too small to influence consumer choices between older combustion-engine cars and new electric vehicles.

Association CEO Tero Lausala noted that while the tax break applies to roughly 60% of passenger and light commercial vehicles in Finland, the average annual saving of €6 per vehicle is insignificant. He stressed that more substantial tax changes are needed to meet Finland’s target of halving transport emissions by 2030.

To achieve this, Finland would need around 900,000 chargeable vehicles by 2030—more than double the current figure of under 400,000. Lausala warned that failing to reduce transport emissions could result in hundreds of millions of euros in additional costs for carbon offsetting.

He called for a shift in tax focus from vehicle purchase to usage and ownership, with higher taxes on high-emission vehicles. Removing the registration tax for non-electric cars was suggested as one way to modernise Finland’s vehicle fleet. Lausala also advocated for policies enabling lower-income households to transition more easily to electric or plug-in hybrid vehicles, which have lower operating costs than combustion-engine cars.

The government has justified the tax relief as support for low-income households facing rising fuel costs, a move made when fuel prices surged and Finland lacked the fiscal space to cut fuel taxes.