Car taxes: Give up and go green

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The Hong Kong government has lowered the bar for car owners who intend to switch to electric vehicles in the one-for-one swap scheme, in an effort to promote green mobility. But local concern groups say the lack of facilities continues to pose as hurdles.

Last year, the city introduced new tax breaks of up to HK$250,000 for car owners who switched to an electric vehicle. Their old cars must be scrapped and de-registered before the waiver can be applied. But response has been lukewarm – only 323 car owners participated in the scheme over the past year.

On Monday, the government said it is relaxing the eligibility criteria of ownership period and licensed period of an old private car.

“The private car owner must have been the registered owner of the old car for 18 months or more, instead of three years or more,” the government said in an announcement.

“The old private car must have been licensed for at least 10 months within the 12 months immediately before its de-registration, instead of at least 20 months within the 24 months immediately before its de-registration,” it added.

Meanwhile, the requirement that an old private car must have been first registered for at least six years remains unchanged.

The new car replacement scheme will remain effective until March 31, 2021.

Local advocacy EV Policy Study Group estimates that 30 percent more car owners will be eligible for the car replacement scheme, after the bar is set lower.

Ms Ingrid Lareina Yung, vice president of another local group Electrify Hong Kong, points out that even the government has relaxed the requirement, the car replacement scheme is not appealing enough to car owners due to insufficient chargers.

Charge this

“There are not enough charging facilities for the electric cars,” Ms Yung says. “There are other situations like the chargers at the public carparks being broken, or the parking space being taken by petrol-powered cars even though it should be prioritized for electric cars.”

By the end of December 2018 there were just 2,166 chargers available for public use for around 11,080 registered electric cars in Hong Kong – just less than two percent of the 617,683 registered vehicles on Hong Kong roads.

Ms Yung also says the tax breaks are not high enough.

“It still costs HK$1 million after the tax break to buy an electric vehicle with a high-capacity battery, or HK$500,000 to buy a cheaper one. It is not particularly attractive to car owners who are driving cars that cost only a dozen thousand dollars,” she says.

Ms Yung adds that although there are cheaper models for electric cars, their power capacity is not very high, forcing owners to constantly struggle with finding charging stations.

Death to gas guzzlers

EV Policy Study Group also suggests the government set a timetable and a goal to phase out petrol-powered cars and popularize electric cars, to step up tax incentives for hybrid cars, and to install more public chargers and sponsor private property owners to provide chargers.

The Hong Kong government has been criticized by local groups for its inconsistent policies on electric cars. Prior to the tax break, the government had completely waived the first registration tax on electric cars, but cut the benefit in 2017.

In comparison, governments worldwide are stepping up efforts to promote electric cars.

Portugal, the Netherlands, Poland and Hungary waive the registration tax on electric cars. In Spain, Germany, Sweden and Italy, electric car owners are waived the annual circulation tax. Authorities in Shanghai have also set a goal to install 28,000 public chargers by 2020.

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