Lai See | Green is good, as long as taxes are not in the red

It's always interesting and sometimes surprising to see what drives policy in Hong Kong. Take the story in yesterdays' SCMP about car dealers asking the government for more time to clear their stock of green vehicles before more stringent regulations are introduced.

In 2007, the government, in an effort to encourage motorists to purchase less polluting cars, introduced a scheme whereby cars that complied with green rules were entitled to a 45 per cent reduction up to HK$75,000 of the first registration tax. However, the number of models eligible for these tax concessions has risen sharply from 21 in 2008 to 46 in 2010 and 139 at present.

You would have thought greener models were a good thing, but the law of unintended consequences has kicked in. Got Chong-key, chairman of the Motor Traders Association, says the organisation was approached by EPD officials and told that there were now too many environmentally friendly cars and this was affecting tax revenues. As a result, new, more stringent regulations are to be introduced reducing the number of eligible models to 26, not because of their impact on the environment but for their impact on government taxes.

One can only assume the Transport Department has nobbled the EPD over this, though its not as if the Hong Kong government is running out of cash.