Advocates lobby for EV tax exemptions
The Income Tax (Clean Transport FBT Exclusions) Amendment Bill, a private Bill put forward by Green Party transport spokesperson Julie Ann Genter is set to be introduced to parliament, and could result in new incentives for electric vehicles purchased by businesses for staff.
The Bill proposes that electric vehicles should be given a five-year exemption from paying Fringe Benefit Tax (FBT), providing financial exemption for businesses to purchase plug-in vehicles for their fleet.
The change would draw EVs in line with utes, which already have FBT exemptions in place when specifically purchased as work-related vehicles. Fleet sales make up a significant percentage of New Zealand’s ute sales, with the Ford Ranger and Toyota Hilux having dominated the market for more than a decade.
“This Bill is an opportunity for the Government to address a glaring hole in its plan to electrify the vehicle fleet and meet their own commitment to reducing carbon emissions,” said Genter.
“The percentage of electric vehicles coming into the country has plummeted since the Government repealed the Clean Car Discount, and the industry has warned that the high rate of Road User Charges (RUC) that will be applied to EVs from April will further disincentivise the switch to efficient, low-carbon vehicles.”
Genter notes that National has previously campaigned on a FBT exemption on electric vehicles. This was touted as an alternative to the previous Labour government’s Clean Car Discount scheme, which National axed at the end of 2023.
“Now [National] can vote for my Bill to ensure that New Zealand maintains the momentum in transitioning the fleet to low-emissions vehicles, which is an essential action needed to meet our climate commitments,” Genter added.
“The majority of new vehicles imported into New Zealand are purchased by businesses, and incentivising employers will mean more EVs will become available in the second-hand market so ordinary New Zealanders can access them.
“The policy is unlikely to have significant revenue implications and is a temporary measure to address a critical need for climate action.”
The Bill has received support from electric vehicle advocacy group Drive Electric. According to Concept Consulting modelling cited by the group, the dumping of the Clean Car Discount could lead to between 100,000 and 350,000 less electric vehicles being on New Zealand roads by 2030.
An exemption to FBTs, Drive Electric argues, could help reduce a looming drop in EV registrations.
“There is a need for urgent measures to encourage EV demand, otherwise we risk losing models and volume to other markets,” said Drive Electric Chair Kirsten Corson.
“This will also affect private investment in public charging. It could take years for the automotive industry to recover. This will also set back our efforts to reduce emissions.
“FBT is a useful lever to pull, given that around 60% of new vehicles are purchased by businesses. Additionally, EVs remain more expensive from an upfront capital perspective than equivalent ICE vehicles.”
Both Corson and Genter note there is precedence in dropping FBTs on low-emissions transport, in the form of a previous amendment presented by Genter and adopted by the Labour government that resulted in bicycles and e-bikes becoming exempt from FBTs.
“Ultimately, cars bought by businesses end up in the secondhand fleet, after two to five years. So policies like this ultimately benefit the consumer in the form of more affordable EVs,” Corson added.
“Drive Electric considers that we need to consider other options beyond FBT exemptions to encourage uptake amongst consumers, and commercial and heavy vehicle operators.”