Austaxpolicy blog

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Will cars go green under the ACT’s reformed vehicle purchase tax?
3 April 2017 by Anna Mortimore

The Australian Government is reviewing its climate policies during 2017 to ensure that they, “remain effective in achieving Australia’s 2030 target and Paris Agreement commitments”. Part of the review will look at complementary policies by various Australian State and Territory governments, in line with the National Energy Productivity Plan (the Energy Plan), which was launched by the Council of Australian Governments in December 2015. The Energy Plan sets a target of 40% improvement in energy productivity between 2015 and 2030, and is expected to contribute more than a quarter of the savings required to meet the nation’s 2030 climate target. The Australian Government established a Forum and Working Group on Vehicle Emissions, to explore ways to meet the Energy Plan’s targets by reducing CO2 emissions in new vehicles and influencing consumer choice.

The ACT Government has proposed a new stamp duty measure in its Vehicle Emission Reduction Scheme, which aims to influence consumers into choosing fuel-efficient vehicles by varying the rate of duty on the basis of CO2 emission bands. That is, the “differential duty scheme” is meant to provide an incentive for the purchase of lower operating emission vehicles and a disincentive against the purchase of vehicles with higher operating emissions.

The ACT government deserves credit for being the first – and only – Australian jurisdiction to introduce green duties. However, the design of these measures mean that they will not be effective in significantly shifting consumer purchasing patterns and achieving the ACT’s ambitious emissions reduction targets.

ACT’s first attempt in “greening” its stamp duty: known as “Green Vehicle Duty Scheme”

Read the full article at Austaxpolicy blog.

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