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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
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