Nats push back on feebate scheme
The National Party has attacked the Government’s new ‘‘feebate’’ scheme for cleaner cars as a tax but hasn’t rejected it outright.
The proposed scheme would see the prices of imported electric vehicles, hybrids, and fuel efficient cars slashed by up to $8000, with the money for the discount coming from fees on higher-emitting vehicles of up to $3000.
National’s Associate Transport spokesman Brett Hudson told Stuff they want to see more details of the proposed scheme before making any firm calls on it. He welcomed the Government’s focus on the long-lived gas of CO2.
‘‘We agree that people respond to incentives and we agree that the transport area is an area worth looking into,’’ Hudson said. ‘‘The challenge is what are the impacts it could have on household incomes, particularly lower-income households.’’
Hudson was much more scathing of the plan in a statement issued later yesterday, describing the feebate scheme as a ‘‘vehicle tax’’ that will ‘‘unfairly penalise people struggling with the cost of living’’.
‘‘Associate Transport Minister Julie Anne Genter has some big questions to answer about how much this scheme will impact farmers and tradies who don’t necessarily have the ability to shift into lower emission vehicles, given suitable options for their lifestyle just don’t exist,’’ Hudson said. ‘‘Hiking the cost of certain vehicles will also impose more costs on some families who still can’t afford to switch to an electric vehicle. The widelydriven Mazda CX-5 will jump by $1500 while the Hyundai Tucson will be an extra $2000.’’
The plan does not only apply to electric vehicles but all newly-imported cars with a fuel efficiency better than 150g CO2/km. Of the 10 most popular imported second-hand cars bought by low income families in 2018, all but seven would receive a discount.
A social impact analysis prepared for the scheme suggested that low income
households buying light vehicle imports would be affected in a ‘‘similar fashion’’ to better-off households.
It showed that in 2021 about 36 per cent of cars bought by low-income families would be subject to a fee while 45 per cent would receive a rebate. This switched as the proposed scheme developed however, so that by 2025 50 per cent of light vehicles bought by low-income families would attract a fee while 34 per cent would attract a rebate.
Hudson said the feebate scheme could see people hanging onto older cars for too long.
‘‘The consequence of this could be some people hanging onto older, less safe vehicles for longer than they should.
‘‘National supports greening the country’s vehicle fleet. The previous Government started the country off on this path by setting an ambitious target of having 64,000 new electric vehicles registered in New Zealand by 2021 and introducing incentives to buy electric.’’
National’s main incentive for electric vehicle purchasers was an exemption to Road User Charges (RUC) which expires in 2021, when the Government’s scheme is expected to replace it. Hudson said the RUC exemption was ‘‘potentially less distortionary’’ and taking away that exemption meant the subsidy would be less valuable, but he believed the exemption couldn’t exist forever as at some point electric vehicles would have to help fund the building and maintenance of roads.
He also criticised the other pillar of the policy which would set an average emissions standard on imported cars from 2022, saying it was so complicated it could easily become an ‘‘emissions trading scheme for car imports’’.
‘‘If the Government really believes we need incentive on the supply side of this then the intervention has got to be simple.’’
While vehicles used by farmers such as utes would generally be pinged by the policy, the overall difference to the cost would be quite small. Any vehicle used for work would likely have its GST-written off and utes are generally excluded from the Fringe Benefit Tax too. Deloitte tax expert Robyn Walker said the Fringe Benefit Tax exemption on a work vehicle worth about $60k could easily come to around $1500 a year.
There are just 14,867 electric vehicles on New Zealand’s roads, a tiny fraction of the light vehicle fleet which is close to four million cars.