The economics of bike riding in Copenhagen

Every few months we read a story in the local (Toronto) press about how those eco-conscious Danes ride their bikes rain or shine (or snow) in Copenhagen, while we here in Toronto don't. The reasons most commonly cited: lack of bike lanes and lack of will of local politicians to build them.

Well, it's true that Denmark is one of the greenest countries in Europe and gets more of its energy from renewable sources than any other country on the continent. But with a climate similar to that of Toronto, it struck me as a bit odd that over 1/3 of all work commutes in Copenhagen would be done on a bike. What motivates Danes to get out of their warm, safe, comfortable cars and onto their bicycles in such great numbers?

The explanation is simple, and it has nothing to do with climate change, greener cities or eco-awareness. At least not in the sense of the Danes voluntarily being more socially responsible or better global citizens than the rest of us.

Their motivation is, unsurprisingly, economic. Danes pay an astonishingly high 180% vehicle registration tax when purchasing a car, on top of the already high 25% VAT. This is a tax on a tax, creating an effective tax rate of well over 200%!

That’s enough to get anyone pushing pedals.

To put this in perspective, in Denmark, a new, well-equipped Camry will cost you the equivalent of $100K+! Have your eye on that classy Mercedes E class? Get ready to spend anywhere up to $280K!

It turns out that our eco-friendly Nordic cousins are not responding to the climate crisis, but to an entirely self- inflicted economic crisis strong enough to discourage all but the rich or desperate from buying cars. It’s not hard to get people to trade in their environmentally unfriendly cars for bikes if you’re willing to tax many of them completely out of the market.

Of course, the Danes are a very eco-conscious country, and they don’t have a domestic car industry (or auto unions) to protect. But try selling a similar tax policy in Windsor or Oakville this winter!

Most people recognize that while cycling is a pleasant way to get around the neighbourhood on a lazy summer weekend and a good form of exercise for the stout and brave, as a commuting method in big cities with Northern climates it’s not the least bit practical and requires extraordinarily punitive economic (dis)incentives to make it popular.

So, the next time you read an article in the local paper touting the wonders of Copenhagen’s bike culture and imploring Canadians to be more like the Danes and bike around in parkas and toques 6 months a year, it may be time to reach for your wallet and quickly jump into your car and speed off.

Eric