As EVs are coming along faster in HK now, there will be more and more opposition to keep the FRT exemption as it is.
As suggested earlier, an abrupt change from 0% to 100% FRT overnight would totally kill further progress. On the other hand, full exemption cannot be expected to continue forever, despite the history of HK SAR incentives.
Hopefully, the Model X will hit Hong Kong before March 31, 2017. In March 2014, three years out seemed far into the future (see the beginning of this thread). With just over a year to go for the next possible extension, we should start lobbying for a solution that will be digestable to the LegCo majority. Now that we are getting the Formula E to Hong Kong this fall of 2016, cancelling the FRT exemption altogether would be quite embarrassing for Hong Kong.
One suggestion could be to introduce a gradual FRT, starting from April 1st, 2017:
1) The rest of 2017 should continue as FRT exempt
2) Starting January 1st, 2018, the FRT for any EV should be 1% off of what it would have been if not exempt. For every calendar month following, this percentage would increase by 1%
This would mean that by April 1st 2026, EVs would have to pay the same FRT as other cars.
By the time the Model III hits the market, FRT would be 10-20% of full FRT (depends on how the "Tesla Calendar" aligns with the Gregorian calendar!)
The reason it is so important with a sliding phasing out is to avoid rushed transactions, followed by a total stall in the EV process. One percent per month is so gradual that it will be enough for people to act faster, yet not so punitive for those not making a specific deadline. The process of
changing ICEVs into EVs will be even further accelerated, in a sustainable way, while increasing revenue to HK SAR.
In fact, if the whole purpose of the FRT exemption is to get EVs here as fast as possible, a
gradual increase could prove even more effective than a constant total exemption, as it encourages people to switch over this month, rather than at a later stage.
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Eventually, a pollution tax could be added to the FRT of any car into Hong Kong. This would mean that even in 2026, there will be an advantage of choosing an EV over a fossil fuel car. The logic and fairness would be: You pollute, you pay.
Congestion issues is a separate matter, which is being dealt with by the HK SAR at this stage. No matter which vehicle, and how much or little it pollutes, it still takes up space when it's driving. GPS based road tax, with variable rates by location and time, could prove very efficient for Hong Kong. Also, more emphasis on electronic/internet processing of paperwork of all sorts, will reduce the need for people to actually drive somewhere.
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I think this was brought up before, just quoting it in to keep the text.
From
LCQ9: Exemption of payment of first registration tax for electric vehicles , see the bottom of this post.
LCQ9: Exemption of payment of first registration tax for electric vehicles
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Following is a question by the Hon Fernando Cheung and a written reply by the Secretary for the Environment, Mr Wong Kam-sing, in the Legislative Council today (November 4):
Question:
To promote the use of electric vehicles (EVs) in order to improve roadside air quality, the Government has been exempting EVs from the payment of first registration tax (FRT) since 1994. Since the higher the retail price of a vehicle, the higher the amount of FRT is payable, it follows that the higher the retail price of an EV, the higher the amount of FRT is to be exempted. It has been reported that as luxury sports EVs have become very popular among the public in recent years, such tax concessions have resulted in a huge sum of tax revenue forgone for the Government. Some members of the public have queried that such tax concessions are in effect subsidising the well-off people to purchase luxury goods by public money, thus contravening the principle of fairness. In this connection, will the Government inform this Council:
(1) of the respective total numbers of newly-registered EVs being exempted from the payment of FRT in each of the past 10 financial years and set out a breakdown by the ranges of vehicle prices in the Annex I;
(2) of the respective total amounts of tax revenue forgone in each of the past 10 financial years due to exempting EVs from the payment of FRT; and
(3) whether it will consider amending the legislation to cease exempting certain types or models of EVs (such as high-priced sports EVs) from the payment of FRT or to grant such exemptions only for those EVs used for public transportation, so as to avoid subsidising the public to purchase luxury goods by public money; if it will, of the implementation timetable and details; if not, the reasons for that?
Reply:
President,
Electric vehicles (EVs) have no tailpipe emissions and are efficient in converting energy from the grid to power. Replacing conventional vehicles with EVs can help improve roadside air quality and reduce greenhouse gas emissions. The Government has been actively promoting the wider use of EVs. These efforts include, inter alia, various government departments taking the lead in using EVs, waiving FRT for EVs, working with the private sector to expand the EV charging network and encouraging vehicle suppliers to introduce suitable EV models into Hong Kong. As at the end of September 2015, 2 658 registered EVs are in use in Hong Kong. Comparing with only 74 in end of 2010, the increase is encouraging. Data also show that the types and models of EVs introduced into Hong Kong have also increased.
My specific responses are as follows:
(1) The respective total numbers of EVs exempted from the payment of FRT under the Motor Vehicles (First Registration Tax) Ordinance in each of the past 10 financial years are set out in the Annex II. These vehicles include private cars and commercial vehicles, excluding special purpose vehicles and government vehicles. As the vehicle types are different, there are also great differences in their prices.
(2) The respective annual amounts of FRT exempted under the Motor Vehicles (First Registration Tax) Ordinance in the past 10 financial years are set out in the Annex III.
(3) At present, the technology of EVs is still under development and some vehicle drivers have yet to establish their confidence in using EVs. Furthermore, the high research and development costs, and low production volume of EVs have resulted in their prices being higher than those of conventional vehicles. This situation is more acute in commercial vehicles. Currently, the net vehicle price of all electric buses and electric medium goods vehicles are over $1 million. The waiver of FRT for EVs is an important strategy in promoting the use of EVs. Based on these considerations, we are of the view that a cap on the tax waived in respect of the FRT of EVs should not be set at this stage so as not to hinder the promotion of the use of EVs. Since the waiver of FRT for EVs is time-limited, the Government will carefully examine relevant factors such as technological development of EVs, the latest EV market situation and the drivers' attitude towards EVs when considering whether the waiver arrangement should be continued with a view to ensuring that public money is well spent.
Ends/Wednesday, November 4, 2015
Issued at HKT 12:47