Buyer’s tax for private electrical cars will comeback due to overall increase in car ownership, says finance chief
Financial Secretary Paul Chan Mo-po has said that the reintroduction of very first registration tax for private electrical cars was because of a large increase in overall vehicle ownership over the past few years. However, electrical private cars only make up a puny portion of the city’s private car fleet.
The very first registration tax was previously waived to promote a broader use of electrical vehicles to substitute diesel and petrol vehicles. The measure was designed to improve roadside air quality.
It was announced in the annual budget that the waiver arrangement, which will expire on March 31, will be revised and that the tax will be reintroduced for electrical private cars. The tax deduction will be capped at HK$97,500.
A Tesla electrified car on display in Hong Kong. Photo: Wikimedia Commons.
Under the fresh arrangement, a popular electrified Tesla Model S60, originally around HK$600,000, would cost HK$380,000 extra in tax.
At a joint radio Q&A programme on Thursday, an audience member called in and said the government was heading rearwards in terms of policy and that many who planned to switch to electrical cars will have to reconsider.
In response, Chan said: “The main consideration was that the growth rate in car ownership was very high over the past few years.”
“If someone is buying electrical cars for private use, yes they will have to pay more now, but the increase [in tax] is far less than the tax from buying expensive cars,” he said.
Paul Chan Mo-po. Photo: GovHK.
But Chan was challenged by the hosts, who said that buyers would still purchase other types of cars if they indeed intended to – as tax for other types of vehicle did not increase. They said the fresh policy would hardly suppress the growth of cars.
Chan admitted the policy may not be enough and that it was only a very first step.
A government source told Apple Daily that the government received HK$Two billion less in taxes because of the tax waiver inbetween two thousand fifteen and 2016.
An Environmental Protection Department spokesman said the number of private cars enlargened by around 60,000 to 536,000 vehicles inbetween two thousand thirteen and 2016, whilst electrical cars enlargened in number from three hundred fourteen to 6,694 during the same period.
Electrical cars made up 7.Three per cent of freshly registered cars last year, but they still represented a petite portion of the fleet of private cars.
The spokesman added that the fresh tax regime has “taken account of the environmental merits of the broader use of electrified vehicles as replacements for conventional vehicles, the enhancing acceptance of electrified private cars by drivers, and the substantial growth of the private car fleet in the last few years, leading to worsening traffic congestion.”
Air pollution in Hong Kong. Photo: Wikimedia Commons.
Green group Clean Air Network said the fresh policy was a reasonable one in that it was necessary to increase the ratio of electrical cars to reduce roadside pollution, but it was also necessary to manage the “out of control growth” of private cars.
From one April two thousand seventeen until thirty one March 2018, Very first Registration Tax of electrified commercial vehicles, motor cycles and motor tricycles will proceed to be fully waived.
The spokesman explained that the government’s priority was to substitute conventional commercial vehicles – the major source of roadside pollution – with electrified ones, thus the tax for commercial vehicles was still waived, and similarly for electrified motor cycles and motor tricycles.
Private electrical cars ordered by buyers from locally registered distributors or arranged for shipment to Hong Kong by owners before 11am Wednesday will still be entitled to have the tax fully waived, even if they are very first registered after March 31.
A Tesla sales told Apple Daily that ten cars in store have been sold in half a day on Wednesday.