December 5, 2023

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New Zealand scraps clean car rebate, introduces road-user tax for electric vehicles

New Zealand scraps clean car rebate, introduces road-user tax for electric vehicles

New Zealand’s newly elected government has announced its decision to scrap the policy of giving discounts and rebates to buyers of electric and low-emission vehicles. Dubbed the “Clean Car Rebate” or “ute tax,” the program aims to encourage the adoption of environmentally friendly vehicles and tax large SUVs and pickup trucks at higher rates. However, the scheme has incurred a substantial loss of $NZ279 million since its introduction in 2021.

The government, led by new Prime Minister Christopher Lacson, believes wealthy New Zealanders who can afford electric cars should not be subsidized by hard-working taxpayers. Therefore, it is committed to complete the project by the end of this year. The Clean Car Rebate offered financial incentives of up to $NZ7,015 to buyers of electric and hybrid cars, while buyers of high-emission vehicles faced taxes of up to $NZ6,900.

In addition, from March 31, 2024, all electric and plug-in hybrid vehicles weighing less than 3,500kg will be required to pay a road user tax of approximately $NZ0.076 per kilometre. The move is seen as a way to generate revenue and offset the loss of the discontinued incentive program. In addition, the government is expected to increase petrol tax by 12 NZ cents over the next three years to 82 NZ cents per litre.

Importantly, Australia has indicated that it is not considering adopting a similar vehicle tax structure. Instead, the Australian government aims to provide access to cleaner, cheaper vehicles through its own electric car rebate and upcoming reforms to fuel efficiency standards.

In conclusion, New Zealand’s removal of the car incentive scheme and implementation of a road use tax for electric vehicles represents a shift in the country’s approach to promoting green mobility. Some may argue that the move could encourage the adoption of electric vehicles, but the government considers the subsidy unnecessary for wealthy car buyers. Only time will tell how these changes will affect the electric vehicle market in New Zealand.

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– Author: Ben Zachariah