Dutch drop taxes on climate friendly cars

7 July 2006

Dutch drop taxes on climate friendly cars: New Zealand should follow

The Netherlands is the latest government to drop taxes on climate friendly cars, in a move business leaders here say New Zealand should follow. Dutch car registration tax – payable on purchasing a new car – will be strongly differentiated according to vehicles' environmental performance. The greenest hybrid cars will secure a 6,000 euro ($12,000) discount compared with standard rates.

The last climate friendly cars will pay 540 euros ($1080) more tax. Cars will be classified into seven categories based on their fuel consumption, CO2 emissions and an efficiency indicator relative to other cars of a similar size. The maximum discounts for conventionally fuelled vehicles will be 1,000 euros.

The New Zealand Business Council for Sustainable Development – whose 51 member companies annual sales equate to 28% of the gross domestic product – says New Zealand should join the growing parade of states and businesses paying incentives to help quickly achieve fuel efficient, low emission vehicle fleets.

The Government is now considering a Business Council policy proposal – supported by six out of 10 New Zealanders in nationwide UMR polling – to pay climate friendly cars buyers cash grants of up to $3000. Incentives will also apply to imported cars. Business Council Chief Executive Peter Neilson says 86,000 climate friendly cars will enter the nation's vehicle fleet each year under the policy.

Over their fleet life buyers will spend $727 million less on petrol, air quality improved – and health bills cut. The British Government offers car tax cuts for climate friendly cars, along with some states in the United States, like California.

Federal incentives are also being advocated by the Bush administration in the United States, and companies, like Google and Bank of America Corp are offering staff rebates of up to US$5000 ($10,000) to buy hybrids. Hybrids are also attracting 10% insurance rebates, and some cities are offering staff parking concessions if they use climate friendly cars.

"Higher petrol prices are boosting sales of smaller vehicles here but incentives will drive a large scale and very quick switch to fuel efficient, low emission cars – and quickly improve air quality. It will help tackle climate change in a very practical way which Kiwis will overwhelmingly support," Mr Neilson says.

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