St. Gallen’s New Vehicle Tax System Disadvantages Electric Car Owners

The Swiss canton of St. Gallen implemented a revised motor vehicle tax system on January 1, 2026, intended to be a “technology-neutral” bonus-malus system. However, the new system is resulting in higher taxes for some electric vehicle (EV) owners compared to those driving gasoline cars, sparking criticism and debate.

How the New Tax System Works

Unlike Germany’s uniform vehicle tax, Swiss cantons individually set and apply motor vehicle taxes. St. Gallen’s new system calculates taxes based on a vehicle’s weight and engine output. Efficient vehicles receive a bonus, while less efficient models are subject to a surcharge (malus).

The issue arises from the fact that EVs, due to their battery packs, are typically heavier than comparable internal combustion engine (ICE) vehicles. They too often have higher engine power.

Cars are categorized based on weight, performance, and consumption. A model of an electric car in a high-consumption version may be in category B or C, but another version with lower consumption may be in category A.

The tax calculation is based on the total weight of the vehicle, with CHF 4,800 charged for every 1,000 kg. The second part is linked to the engine power and amounts to approximately CHF 34 for each kilowatt. Subsequently, the amount is adjusted by the percentage bonus or malus according to the category.

Examples of the Tax Disparity

According to comparisons, a gasoline-powered Volkswagen Golf can cost around CHF 346 per year in taxes, while a comparable Volkswagen ID.3 can cost CHF 9,655 per year, even after a 25% bonus. This difference is expected to increase after four years when the bonus expires.

The Fiat 500 presents a different scenario. An electric Fiat 500 starts at CHF 4,300 in taxes, compared to CHF 4,500 for a hybrid version. However, after four years, the electric Fiat 500’s tax will rise to CHF 8,500, exceeding the cost of the hybrid.

Financial Concerns and Historical Context

The reform was triggered by a financial imbalance. Prior to the new system, electric cars were tax-exempt for the first four years, leading to a drop in revenue for the canton. The new system aims to secure funding for road maintenance.

The canton of St. Gallen warns that there will be a lack of money in the budget if the new tax system does not generate sufficient revenue. According to last year’s registrations, electric cars had a 22.7% share of the market.

Other Cantons’ Approaches

St. Gallen’s approach differs from other Swiss cantons. Zurich, Glarus, and Solothurn currently exempt electric cars from taxes, while Basel-Stadt, Bern, and Graubünden offer significant fee reductions. Solothurn is preparing a new system to include electric cars in its tax calculations.

Criticism and Concerns

Critics argue that the canton has made significant errors in implementing the reform, also referred to as the road traffic levy. Residents have expressed frustration, with some feeling they are being unfairly penalized for choosing environmentally friendly vehicles. Some argue the system sends the wrong signal regarding climate policy.

The new motor vehicle tax in the canton of St. Gallen was intended to promote climate-friendly drive systems. Instead, some electric car drivers are paying more than combustion engines.