Tax breaks slashed for electric vehicles

Michael Shum

The first registration tax concessions for electric vehicles will be extended for two years - but with a reduction of 40 percent.

Electric private vehicles priced over HK$500,000 will no longer be eligible for the concessions.

Despite the reduction, government sources believe that the move will have little impact on cheaper electric private cars and will not deter citizens from purchasing the vehicles.

Paul Chan acknowledged the government's efforts in promoting the use of electric vehicles but said the price reduction of such vehicles and the increased availability of options necessitated the reduction in concessions.

Under the "One-for-One Replacement" scheme, the maximum first registration tax concession for electric private cars will be adjusted to HK$172,500 from the previous HK$287,500. The concession ceiling for general electric private cars will also be lowered to HK$58,500.

"However, electric private cars valued at over HK$500,000 before tax will no longer be entitled to concessions under the principle of 'affordable users pay,'" Chan said.

"On the other hand, the first registration tax for other types of electric vehicles, such as electric commercial vehicles, electric motorcycles and electric motor tricycles, will continue to be waived in full over the next two years."

Government sources said that the decision took into account the decreasing prices of electric private cars and the growing availability of cheaper electric car brands in the market.

They dismissed concerns that the reduction in concessions might discourage citizens from switching to electric vehicles, saying "even with the lower maximum amount, there would still be over HK$170,000 in tax concessions, which is a significant amount".

They also said the increasing convenience of driving an electric vehicle will outweigh the reduction in tax concession as the number of charging facilities continues to rise.

In addition to electric private cars, Chan said the government has been promoting trials for new-energy public transport, including electric tour buses and commercial transport.

Sources the government has already received applications for electric tour buses and expects to see them on the road within the year.

Chan also stressed the government's commitment to developing Hong Kong International Airport into a green airport. The Airport Authority is collaborating with relevant government departments to simplify approval procedures for the transportation and storage of sustainable aviation fuel, aiming to encourage more airlines to use it.

"The government plans to offer block registration incentives to attract shipowners to extensively register their ships in Hong Kong and intends to enhance tax concession measures for the maritime industry later this year," he said.

The Airport Authority is making progress with the three-runway system at Hong Kong International Airport and expects it to be commissioned by the end of this year.

michael.shum@singtaonewscorp.com