Hong Kong Budget 2017-2018

Targeting electric cars won’t ease Hong Kong’s traffic or pollution problems

Edwin Lau has some suggestions on how to control car numbers and reduce congestion, and none of them involves cutting the tax waiver for electric cars, as our new financial secretary did in his maiden budget

PUBLISHED : Thursday, 02 March, 2017, 3:38pm
UPDATED : Thursday, 02 March, 2017, 8:47pm

In his maiden budget speech last week, Financial Secretary Paul Chan Mo-po announced a drastic reduction to the waiver on the first-time registration tax for electric private cars, effective almost immediately. He described this as a measure to curb private-car growth for better air quality.

The government has waived this tax in full since 1994, in an effort to encourage more people to buy electric cars, thus reducing roadside emissions.

The government of that era showed foresight for launching such a bold policy. Unfortunately, electric cars were quite a new concept in the mid-1990s and choices were limited. So even with the waiver, Hong Kong people were reluctant to buy one.

The waiver has now been capped at HK$97,500, and came as a big shock to the industry and potential buyers. With this change, a buyer of a high-end electric car will have to pay over HK$800,000 for the tax alone, more than enough to buy a luxury car that guzzles petrol or diesel.

Price-sensitive consumers will probably do exactly that: shift back to buying conventional cars rather than zero-emission electric cars.

Decision to cut Hong Kong’s electric vehicle tax waiver is ‘backwards’ and sends wrong message, critics say

Electric private cars currently account for only about 1.2 per cent of all private cars in Hong Kong, so it is hard to understand how the new measure could have any big impact on curbing the growth of private car numbers.

Meanwhile, there is no doubt we must control our car numbers to reduce traffic congestion and improve air quality. To achieve this, the government has plenty of options other than targeting electric cars:

Increase the first-time registration tax and annual licence fee for private vehicles with high fuel consumption and emissions, as well as for a second car registered by the same owner.

Implement low-emission zones in the busiest districts.

Introduce congestion charges in the most congested areas.

Standardise the tolls for the three cross-harbour tunnels, enabling drivers to choose the tunnel that suits their destination rather than the one that’s cheapest.

Subsidise the use of public transport.

Ensure public transport vehicles have low emissions.

Hong Kong must target private cars to stop the city grinding to a halt

Cutting the first registration tax exemption for electric private cars is misguided and ineffective. It is to be hoped that the new finance chief will instead adopt some or all of the more viable suggestions above, every one of which will genuinely help to improve roadside air quality in Hong Kong. He might also seek advice from his colleague, Secretary for the Environment Wong Kam-sing, who I am sure will be most pleased to help.

Edwin Lau Che-feng is executive director of The Green Earth. [email protected]