Hong Kong Budget 2017-2018

Tax waivers for electric vehicles may be extended beyond a year, says Hong Kong financial chief

Paul Chan says concession for commercial vehicles will not necessarily be taken away after March 31 next year

PUBLISHED : Friday, 24 February, 2017, 2:34pm
UPDATED : Friday, 24 February, 2017, 5:51pm

Hong Kong Financial Secretary Paul Chan Mo-po has indicated that waivers for first-time registration tax on electric commercial vehicles may be extended beyond a year.

Chan, who was speaking on an English radio phone-in programme on Friday morning, had announced in his maiden budget on Wednesday that waivers on first-time registration tax for electric commercial vehicles would be applied from April 1 to March 31 next year, but discounts given on the tax for electric private cars would be capped at HK$97,500, after considering the overall growth of the private car fleet.

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“Although the extension is one year, it may be perceived as a short-term measure … at this stage, I would not say the extension of concession for commercial vehicles will necessarily be taken away one year later,” said Chan, responding to an audience member who questioned whether the latest measures were penalising the use of environmentally friendly vehicles.

The cap of HK$97,500 means a buyer of a Tesla Model S would end up ­paying about 80 per cent of the tax payable on the car.

But Chan said the incentives could still be strong for those who buy cars which cost below HK$400,000, adding that the main objective was still to reduce the number of cars on the road.

“Discouraging people from buying, in many cases, these high-end electric cars as a second car is something that we consider worth doing,” he said.

Chan added that congestion charges were a measure under consideration, and that the Transport and Housing Bureau was looking into it.

The new tax took effect at 11am on Wednesday, meaning customers who place orders for electric private cars after that time would need to pay the revised rate.

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As of the end of January, there were 7,434 electric vehicles on the road among more than 810,000 registered vehicles, a big jump from fewer than 100 at the end of 2010.

The government first brought in full tax exemption for all electric cars in 1994 in an effort to promote their use and reduce roadside pollution.

A spokeswoman for electric carmaker Tesla said on Wednesday that the firm was “disappointed” that the government had withdrawn its support for electric cars.