Securing a tax break by trading in a petrol car for an electric model just got easier after the Hong Kong government relaxed the eligibility criteria on Monday.
But lawmakers responded by calling on officials to take it a step further. Some wanted better tax breaks and suggested that all criteria be scrapped so anyone trading in a vehicle would qualify.
In February last year, the government introduced a programme for electric car buyers to enjoy a tax concession worth HK$250,000 (US$32,000) if they traded in a fossil fuel-powered car. But there were conditions: the applicant must have owned the vehicle for three consecutive years, and the car had to be at least six years old and licensed for 20 months.
The Transport Department on Monday said the ownership period had been cut to 18 months and the licensed period slashed to 10 months. The new conditions took effect immediately.
The government decided on the changes after studying public opinion, a department spokesman said.
Secretary for the Environment Wong Kam-sing said at a Legislative Council panel meeting on Monday that of the eight brands that sold electric cars, many of the models from seven brands allowed buyers to pay no first registration tax.
“So what’s the purpose of raising the tax break? We have already achieved the policy’s purpose,” he said.
Electric and hybrid models made up about 5 per cent of the city’s vehicles, Wong added.
Some 454 electric cars were registered from March to December last year and the buyers of only 321 benefited from the tax break.
As of October, 10,940 electric vehicles were registered in Hong Kong.
Officials had previously defended the strict criteria as a way to stop opportunistic buyers snapping up cheap vehicles and then immediately disposing of them to enjoy the tax break.
The HK$250,000 concession is handed out in the form of a discount on the first registration tax for electric private cars valued at HK$377,500 or less.
Civic Party lawmaker Jeremy Tam Man-ho said people were holding back from buying electric cars despite the tax break because there were not enough charging stations in Hong Kong.
“There may be charging stations in new residential estates. But you may not be able to find them in the old estates,” Tam said. “To encourage the public to buy electric cars, the government could decide from now on that all its new vehicles must be electric.”
He suggested that the ownership and licensed period requirements under the tax break scheme be completely scrapped so more people would trade in their petrol cars.
Lawmaker Gary Chan Hak-kan, from the Democratic Alliance for the Betterment and Progress of Hong Kong, said the tax break amount should be raised because those buying more expensive electric car models would pay more than HK$250,000 in first registration tax.
Car registration taxes rise incrementally, starting at 40 per cent on the first HK$150,000 of the vehicle’s taxable value, meaning buyers of a HK$600,000 battery-powered Mercedes-Benz E200, for example, faced a bill of about HK$400,000, or an extra two-thirds of the purchase price.
Democratic Party lawmaker Ted Hui Chi-fung said the tax break scheme had failed so far. Although minister Wong pointed out people could choose from seven electric car brands without having to pay any first registration tax, Hui said that was far from enough because there were so many more brands selling petrol cars.
The trade-in scheme, launched in February last year, is effective until March 31, 2021.
Electric car buyers who do not wish to take part will still enjoy a tax break, but much smaller, at HK$97,500.
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