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SCMP Reporter

MOTORISTS chugging along with old cars are being offered big tax incentives to upgrade to new vehicles.

  A new Government scheme makes them eligible for a tax discount of 20 per cent or up to $30,000 if they scrap their old car.

  The savings will be made by reduced payments on first registration tax (FRT) for the new vehicle, typically 40 to 60 per cent of the retail price.

  The Government introduced the Scrapping Incentive Scheme to cut pollution and improve air quality by reducing the number of vehicles using leaded fuel.

  Financial Secretary Donald Tsang said there were more than 40,000 older cars on the road, mostly using leaded fuel and without catalytic converters to reduce pollutant gases.

  The scheme, which has just come into effect, applies to cars 10 years old or more. The car must have been owned and licensed in Hong Kong for at least two years by the applicant. The new car is not allowed to have been registered anywhere previously.

  Motorists' representatives and car industry leaders have questioned the effectiveness of the scheme.

  Hong Kong Automobile Association chief executive Kendy Chan Kin-chung said the measure would apply only to about 5 per cent of old cars and was unlikely to encourage people to change because most of the older ones were prestige vehicles, such as BMW or Mercedes Benz.

  There was little incentive to buy a similar car when the maximum reduction was limited to $30,000.

  He said that even for cheaper vehicles, a $100,000 car - which attracted registration tax of 40 per cent - would only mean an $8,000 discount, not enough to justify the purchase. If a car was in good condition, there was no need to exchange it.

  William Lau, general manager of Jaguar Hong Kong, said that while he was encouraged by the Government's action, he agreed that not many cars on the road would meet the age requirement. 'Generally, people in Hong Kong don't hold on to older cars,' he said.

  In the past, motorists would change cars on a whim, but the recession had lowered turnover to about every three years. This was still a much higher rate than in countries such as the United States, where the average period was seven years, he said.

  Car-owners at the lower end would make 'substantial' savings, but in the mid-range, the benefits were minimal.

  'People buying cars worth $300,000 or more are only really looking at a 10 per cent reduction in the overall cost.'   He added that the measure was further restricted by the two-year ownership and licensing requirement. 'It's not a case of you owning a 10-year-old car. You have to own it for a certain period and it has to be roadworthy. It's not a blanket 10-year rule, there are fine-print qualifications.'   Chow Siu-chung, senior executive officer, licensing, at the Transport Department, said about 12,000 old cars would be eligible and he expected about 1,000 people would apply for the scheme in the first 12 months. The 'comprehensive' conditions were to minimise abuse and the Government would review the measures in a year.

  Motorists interested in the scheme must take their old cars to an approved car-scrapping centre, de-register it with the Hong Kong Licensing Office, and apply for an FRT concession entitlement certificate. They have six months to obtain a new vehicle, and if they sell it within a year of registration, they have to repay the tax concession.



Tax discounts offer drivers incentive to scrap old cars