‘Ute tax’ se to be killed off in December

Sales of utes like the Ford Ranger and Toyota Hilux are likely to pick up once the Clean Car Discount’s levies on high-emission vehicles are dropped in 2024. Photo: Matthew Hansen/Stuff.

The National Party’s victory during on the night of the October 14 general election is set to spell the end of the Clean Car Discount ‘feebate’ scheme, which implemented sizable rebates for electric vehicles and plug-in hybrids while also pinging high-emission vehicles like utes.

National issued a pledge in September that it planned to eliminate the Clean Car Discount by December 31 of this year if elected into office, noting that Labour had promised that the scheme would be fiscally neutral – a promise that had not come to fruition.

First rolled out in mid-2021, the Clean Car Discount was solely a rebate-based programme, with new and used EVs and PHEVs earning generous rebates in order to encourage consumers to shift to greener vehicles to combat climate change and energise transition.

As had been planned by Labour, the scheme ramped up in early 2022 to include a wider count of hybrid and even pure petrol vehicles with low emissions figures. More notably, though, this was when the scheme’s ‘feebate’ model commenced.

Where previously the scheme had been paid out from a seeding fund, the government planned for it to be self-funding by using levies of up to $5,175 on high-emission vehicles, most notably including utes – one of the most popular vehicle segments in the country. This element of the scheme earned it the ‘ute tax’ label amongst critics, including National.

Whilst the outgoing Labour government has argued that the scheme has been successful due to the immense growth in popularity of EVs in New Zealand since its introduction, National, the Act Party, and other commentators like Toyota New Zealand CEO Neeraj Lala have claimed the opposite – in particular noting the scheme’s inability to be self-sustaining.

Waka Kotahi data released earlier this month confirmed that the Clean Car Discount has cost the government $279m since its inception (noting that the feebate aspect of the scheme was introduced eight months after the rebates started).

“National does not believe New Zealanders who can afford a brand-new electric car need a subsidy from taxpayers to buy it. The move to EVs will happen without subsidies as those who can afford new cars choose to reduce their personal carbon footprints and their dependence on fossil fuels,” said National leader Christopher Luxon in a statement issued last month.

“The subsidies funded by Labour’s ute tax don’t go to low- and middle-income New Zealanders, but to people who could already afford to buy an EV. And it is deeply unfair to tax work vehicles like utes and vans that farmers and tradies need to do their jobs in order to subsidise the cost of EVs.

“The Ministry of Transport has admitted the ute tax and EV subsidy scheme is fiscally unsustainable, meaning it will continue to require ongoing taxpayer funding.”

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Instead of subsidising EV purchases, National plans to support electric vehicle adoption by investing further in the creation of the public charger network, pledging to build 10,000 chargers around the country by 2030 at a cost of $257m.

In a release issued prior to the election, Labour noted that the average emissions on new vehicles have dropped 33 per cent since the rebate’s implementation and annual uptake of electrified vehicles have grown 180 per cent. Up to the end of September, the Clean Car Discount scheme had resulted in 156,000 rebates paid to customers around the country.

Whilst National has been forthright in its plans to ditch the Clean Car Discount, it is set to retain the Clean Car Standard – a sister scheme that introduces increasingly strict emissions standards on new and used vehicles coming into the country.

During an industry gathering in Auckland August, National transport spokesperson Simeon Brown suggested that the Standard is likely to get adjusted under National. National’s coalition partner, the Act Party, has previously pledged to axe the Clean Car Standard.

-Matthew Hansen/Stuff.



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