BREAKING: EPD scraps tax incentive for environmentally-friendly private vehicles

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The Environment Protection Department (EPD) today announced they will end the Tax Incentives for Environment Friendly Petrol Private Cars Scheme (EFV) effective April 1st, 2015. Pure electric vehicles will continue to enjoy first registration tax (FRT) concessions at least until 2017.

An EPD spokesperson explained the emission control technology of petrol private cars has advanced to such a mature stage that further emission reduction is limited, and any impact the scheme might have would thus be minimal. “The Euro 6 emission standard for petrol private cars, which the European Union plans to introduce by September 2015, will have the same emission limits for nitrogen oxides and hydrocarbons, which are key pollutants emitted by petrol vehicles, as the Euro 5 standard. We have thus decided to terminate the scheme,” said the spokesperson.

According to the EPD website, the FRT reduction rate under the current scheme could reach 45%, subject to a cap at HK$75,000 per car.

Levelled playing field
Thorsten Jaede, Managing Director of Volkswagen Hong Kong,  said his firm welcomed the decision, and felt scrapping it altogether would take away any artificial pricing and level the playing field. In an earlier interview with Harbour Times, he felt that the scheme had been unfair to European vehicles.

The number of European vehicles that qualified for the EFV scheme had dropped dramatically compared to their main Japanese competitors. From 79 out of 149 in 2013, to 5 out 56 in 2014, then to 8 out of 37 in the current list.

The European Chamber of Commerce had produced a position paper arguing that the current EFV scheme for private cars has been increasingly limited in impact and has unfairly favoured Japanese vehicles. The paper proposed that the EPD redirect the resources foregone in the scheme to other, more polluting commercial vehicles.

Pleasantly surprised
A meeting between the EPD and the industry was held on the 17th this month announcing the cut. The meetings were supposed to be held in November last year, but were deferred by the EPD until recently, leading to strained ties between the EPD and the industry. Mr Jaede expressed his surprise at the decision, saying “we didn’t know what to expect as nothing was leaked to the industry before hand.”

“Although it took a while, we’re glad the Government has chosen to listen to us.” said Mr Jaede.