By: JD staff writer
Jordan Daily – In light of the increasing adoption of electric vehicles (EVs) and their significant impact on transportation and environmental sustainability, the Jordan Strategy Forum urges the government to reconsider its recent decision to impose special taxes on electric vehicles. This move comes amidst a backdrop of rising fuel efficiency and declining public revenues from fuel taxes, which are traditionally used to finance vital infrastructure and public services.
As global sales of electric vehicles soar—from 7,000 battery electric cars in 2010 to 9.5 million in 2023—the demand for sustainable transportation options continues to grow. In Jordan, over 45% of vehicle sales are now electric, positioning the country as a regional leader in EV adoption. However, the newly imposed special taxes, particularly on affordable electric vehicles priced between JD 10,000 and JD 25,000, disproportionately affect middle-income households.
The Forum emphasizes that instead of increasing taxes on electric vehicles, the government should explore alternative revenue-generating measures, such as a moderate increase in vehicle registration fees across all categories. This approach would provide a steady income stream while supporting the transition to cleaner energy sources, ensuring that Jordan keeps pace with global trends in sustainable transportation.
As the Kingdom moves toward a greener future, it is crucial to strike a balance between necessary public funding and the promotion of environmentally friendly technologies.
The Jordan Strategy Forum advocates for policies that foster the continued growth of the electric vehicle market, benefiting both the economy and the environment.
- Background
Electric vehicles are one of the most significant technological advancements of the modern era. With growing environmental awareness and a heightened focus on sustainability, their adoption has surged significantly in recent years. Continuous technological innovations, supportive government policies, and the increasing emphasis on reducing carbon emissions have all played pivotal roles in encouraging individuals to choose electric vehicles as a more environmentally friendly and efficient means of transportation.
With the increasing use of electric vehicles (battery-powered and plug-in hybrids), fuel demand has fallen to unprecedented levels, leading to lower public revenues resulting from fuel taxes. This alternative is effectively reducing public revenue WHICH is typically used by many countries in the world to finance transport infrastructure, highways, as well as other items of public expenditure.
- Key Observations on Electric Vehicles
Based on the International Energy Agency’s (IEA) database, it is worth noting the following observations about the use of electric vehicles globally, regionally, and locally.
A. Global sales of battery electric cars have increased from 7,000 in 2010 to 9.5 million in 2023.
B. Global sales of plug-in hybrid cars have increased from 450 in 2010 to 4.3 million in 2023.
Source: 2024 Global EV Outlook, published by the International Energy Agency (IEA).
- In 2023, electric vehicles account for approximately 18% of global vehicle sales. Notably, this share reached 93% in Norway, 60% in Sweden, 38% in China, and 24% in Germany.
- Jordan led the Middle East in electric vehicle sales, with over 45% of all vehicles sold being electric. The UAE ranked second in the region, with a sales share of 13%.
Source: 2024 Global EV Outlook, published by the International Energy Agency (IEA).
The growing shift toward electric vehicles in many countries has been fueled by various “tax benefits” and incentives, such as tax exemptions, reduced taxes on electric vehicles, and lower registration fees.
Despite their many advantages, while electric vehicles still contribute to the wear and tear of streets, highways, and bridges, they do not generate fuel tax revenue like traditional vehicles do. Naturally, this simple fact raises the question: How will road infrastructure and other public spending be financed if revenues from fuel taxes decline?
Many countries are exploring various options to compensate for the revenue shortfall caused by reduced fuel consumption. These include increasing fuel tax rates, raising vehicle registration fees—particularly for electric vehicles—transitioning from fuel taxes to road usage fees (based on mileage traveled), and introducing taxes on the electricity used to charge electric vehicles.
On September 17th, 2024, the Jordanian government made sudden amendments to the special tax regulations, including a reduction in the special tax on gasoline vehicles from 67% to 60%, and the imposition of a special tax on electric vehicles. This tax is set at 40% tax for electric vehicles whose price is between JD 10,000 and JD 25,000 JOD, and at 55% tax for those whose price is above JD 25,000.
Relative to the above-mentioned observations, is useful to note that the total number of registered vehicles in Jordan has risen from around 1.6 million in 2018 to approximately 2 million in 2022. Naturally, this number is expected to increase further in 2023 and 2024. Indeed, the increases in the number of registered vehicles is driven by several factors, including population growth, inadequate public transport system, and the rising demand for more affordable electric vehicles compared to fuel-based alternatives.
Source: Directorate of Public Security: Driver and Vehicle Licensing Department.
- Jordan Strategy Forum Recommendations
Given the economic and environmental benefits of electric vehicles (EVs), the Jordan Strategy Forum emphasizes the need to reconsider the government’s recent decision to impose special taxes on EVs. Instead, the government should explore alternative measures to offset the decline in its revenues, especially since the tax increase disproportionately affects EVs priced between JD 10,000 and JD 25,000—a segment most suitable for Jordanian households (typically consisting of 4.8 members), and those with middle incomes.
One viable alternative is a moderate and carefully planned increase in vehicle registration fees across all categories. This approach would indeed help compensate for the reduced fuel tax revenues by generating consistent annual income, while maintaining Jordan’s progress towards clean energy adoption. This would also ensure that the country’s transition to cleaner energy sources continues at a pace comparable to other nations in the region and aligned with global trends.
