No Need For NZ To Follow UK Tax

9 August 2006

Media Release

No need for New Zealand to follow UK plan for $5400 annual tax on gas guzzlers

New Zealand has no need to follow a proposed British government plan to impose an annual NZ$5,400 tax on cars with the biggest engines in a bid to lower carbon dioxide emissions.

The plan to lift vehicle excise duty on four wheel drives and other big engine gas guzzlers from 220 pounds (about NZ$660) to 1800 pounds (NZ$5400) a year is being put to the British government by a cross-party committee of MPs.

The move is part of a climate change control package.

The New Zealand Business Council for Sustainable Development says the Government here should steer clear of ideas for big, on-going disincentive taxes which involve "too much stick, not enough carrot".

"It's not needed. New Zealanders will respond to a positive incentive to buy a more fuel efficient low emission vehicle. We can get a better result and encourage Kiwis into low emission, fuel efficient vehicles in a big way with one-off cash incentives of up to $3000 for doing the right thing," Business Council Chief Executive Peter Neilson says. "Engine size is not necessarily a good indicator of emissions and fuel performance. It's up to people to decide what they want to use, but to the Government to provide incentives for people to switch to climate friendly vehicles."

The Business Council has put the cash incentives policy proposal to the Government. It is now under active consideration by officials working on climate change policy options to clean up the country's ageing car fleet.

The Business Council proposes a one-off cash payment of $3000 for new cars using up to 6.5 litres of petrol per 100 kilometres, and $1800 for new cars using 6.5 to 8.5 l/100km.

Cash grants of $1500 are sought for people buying climate friendly imports, and a one-off penalty of $2000 for passenger vehicles with a fuel efficiency worse than 12 l/100km.

Vehicles qualifying for the cash payments will need to meet the latest Euro 4 or equivalent emissions standards. Many vehicles do, including luxury cars from the latest 2.7 litre XJ Jaguar diesel, through to medium to small sized cars.

Nationwide UMR polling for the Business Council shows 60% support the cash grants and, when the penalty is introduced, supports remains solid at 55%.

Mr Neilson says Business Council research shows the cash incentives scheme will see 430,000 climate friendly cars enter the fleet in just five years if the proposal is adopted. Each 86,000 climate friendly cars entering the fleet annually will save owners $727 million a year in petrol. With the cost of oil having hit a new high overnight, it is likely fuel prices will rise again, making the incentives even more necessary.

"We would be urging officials here, who are investigating how we cut vehicle emissions and improve air quality, not to follow the UK example. Huge tax increases on vehicles are not needed. Kiwis will respond well to incentives and are keen to do the right thing to preserve our quality of life here."

ENDS

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