Up to 107,000 motorists to be hit with car tax under Government’s ‘feebate’ scheme

As many as 107,400 motorists will be hit with charges of up to $5175 next year under the Government’s scheme to encourage drivers to switch to electric vehicles and hybrids.

The Clean Car Discount, or “feebate” scheme, charges fees on imported cars of up to $5175 which are then used to subsidise discounts of up to $8625 for people buying EVs, hybrids and other low-pollution cars.

New figures have revealed the Government’s own modelling expects between 74,600 and 107,400 cars to be hit with “fees” under the feebate scheme in 2022.

Officials don’t yet know how many cars will be hit with fees beyond next year, because the rates of fee and subsidy and the sort of vehicles they apply to haven’t been set yet.

The figures were obtained by the Act Party from Transport Minister Michael Wood – and Act says they raise the prospect it will end up being a “tax grab” by the Government.

Wood downplayed the numbers, saying the policy would only apply to imported vehicles and not the larger second-hand market for vehicles.

Wood said as many as 105,000 cars will be eligible for a discount next year, and argued the policy will help decarbonise the transport sector, which makes up 47 per cent of New Zealand’s total greenhouse gas emissions.

A further 77,100 vehicles would be unaffected by the policy because their emissions were low enough to avoid the fee.

“It’s also important to note that NZ’s second-hand market is much bigger, with around 575,000 sold in 2020 and we know that lower-income households tend to buy from the local second-hand market, which is unaffected by the policy,” Wood said.

Act’s transport spokesman Simon Court said the numbers showed the Government could end up pocketing more money from the scheme than it paid out in discounts.

He estimated that if the average fee attracted under the scheme was $3,000, and it hit 91,000 motorists, the Government would collect fees worth $273m.

Court said the Government would need to offer $6,000 rebates on 45,500 EVs for the scheme to even out, despite only 1600 EVs being sold in New Zealand last year.

“Under any plausible scenario, this policy will be a tax grab, taking hundreds of millions more than it pays out,” Court said.

The Government has committed to not pocketing any revenue raised from the scheme.

Officials will review the scheme regularly and if money raised from fees on cars exceeds money paid out in subsidies, the fees would be adjusted to ensure all revenue raised gets recycled into subsidies over the 10-year period the scheme is in operation.

Court said many of the vehicles hit with a fee under the scheme would be work vehicles, or cars needed by large families.

“Tradies and farmers need these vehicles, they can’t move hay bales with a Nissan Leaf. We’re taxing tradies to subsidise Teslas,” Court said.

Court said the scheme’s fees constitute a broken election promise from Labour, which promised not to implement taxes it hadn’t included in its manifesto.

Labour “didn’t campaign on this policy and now it has blindsided a group of New Zealanders who won’t be able to avoid this tax,” Court said.

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