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British Budget blazes trail for car price cut

23 March 2006
Media Release

Business Council: British Budget blazes ‘blindingly clear’ trail for New Zealand government to cut car prices here

The British Budget has overnight blazed a clear trail for New Zealand’s Government to follow to deliver major growth in this country’s fuel-efficient car fleet.

British Chancellor Gordon Brown has cut carbon taxes on fuel-efficient/low emission vehicles, in some cases to zero, in a move which will see half of his country’s motorists pay less each year – and owners of gas guzzling vehicles pay more.

The New Zealand Business Council for Sustainable Development – representing 50 companies whose turnover is equal to generating 28% of this country’s gross domestic product – said today the government here could easily introduce a better policy change in its May 18th Budget.

The Business Council has put a well-researched proposal to the Government to cut the price of fuel-efficient-low emission cars by making cash payments to buyers of between $1500 and $3000. The business leaders also want a $2000 penalty charge added to gas guzzling and newly registered vehicles using 12 litres or more of fuel per 100 kilometres.

Similar incentives were proposed for used imports adding $1,000 to the cost of gas guzzling cars producing high levels of emissions and a $1,000 payment for used vehicles that are highly fuel efficient and meet Euro 4 or equivalent emission standards.

The move would cost the New Zealand Government $97 million a year if 40% of new car registrations are fuel-efficient/low emission.

Business Council Chief Executive Peter Neilson says the US Government in November also announced tax cuts to encourage the purchase of fuel efficient vehicles, including hybrids – and the moves announced overnight in Britain “blaze a blindingly clear trail for the New Zealand Government to follow into its May 18th Budget.”

Mr Neilson says New Zealanders are driving one of the oldest vehicle fleets in the world at a time when the new smaller petrol, some diesel and petrol/electric hybrid cars not only have lower carbon dioxide and nitrous oxide emissions – but can use less than half the fuel than vehicles did a decade ago.

“We need to follow the British and US lead in May. We’re hopeful the Government is looking seriously at acting on this – this year,” Mr Neilson said.

“We’re also going to poll the country in the next few weeks to see if New Zealanders agree with bringing in price cuts for fuel efficient cars. It’s a simple, potentially highly effective move we can make to preserve our environment and quality of life and we suspect public support for this will be extensive.

In other moves the British Government also announced it would increase the (tax) duty differential between non-bio and bio fuels to 35 pence per litres by 2008; other energy saving moves which will see another 250,000 homes insulated; new regulations to lift building energy efficiency 40% above 1997 standards; smart metering and labeling on consumer goods; 50 million pounds to investigate micro technologies so homes and businesses can generate their own renewable energy (starting with projects on 25,000 buildings; and 20 million pounds in seed funding for a new institute aimed at finding ways of putting Britain ahead of the world in new environmental technologies.


The Business Council’s recommendations on price cuts for fuel efficient cars are outlined in its report “Incentivising Greener Vehicles” (available at . They propose a grant of NZ$3,000 for vehicles with fuel economy of 6.5 litres/100 kilometres, a grant of NZ$1,500 for vehicles achieving between 6.6 and 8.5L/100km, and a penalty charge of $2,000 on first registration for passenger vehicles with fuel efficiency worse than 12L/100km. The grants are not just for hybrid technology but all cars which meet the low emission/low fuel consumption criteria.

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