Labour is breaking its promise to not introduce new taxes by slapping new taxes on tradies, farmers and large families.
The ‘feebate’ scheme ignores the fact that vehicles are already taxed and subsidised through the Emissions Trading Scheme (ETS).
In September 2020, Grant Robertson said ‘we will not be implementing any new taxes this term’, aside from hiking the top income tax rate.
The combination of feebate plus ETS charges means a double tax for Kiwis who need larger, less fuel-efficient vehicles.
Feebate ignores the fact that we already tax and subsidise cars based on their fuel efficiency.
Motorists pay 77.3c a litre in petrol taxes, plus an ETS tax of 9c a litre. In Auckland, there’s a further 10c regional fuel tax. GST is charged on top, taking total tax to around 99.3c a litre (and 110.8c in Auckland). That means EV owners get a subsidy of at least 99.3c a litre in taxes.
Over the lifetime of a vehicle, the subsidy for EVs is already large. The driver of a Toyota Corolla that travels 200,000km at 8L/100km will pay approximately $15,888 of fuel tax over its lifetime (99.3c/L x 8L/100km x 200,000km).
Worst of all, someone shifting to an EV will not actually reduce total emissions. Because they will not use carbon credits under the ETS, they actually free up credits for someone else to use. This is because the total number of credits available is capped under the ETS.
The Government might ask itself why people aren’t choosing EVs in spite of massive subsidies. Motorists might be trying to say something about their efficiency as a way of reducing emissions.
The Government needs to drop its ad hoc bans, regulation, taxes and subsidies in tackling climate change. The ETS is the most cost-effective tool we have for reducing emissions.
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