Tax changes in this year's Budget will lead to more affordable second-hand electric vehicles for ordinary buyers, an electric vehicle advocacy group says.
By Kate Newton of RNZ
The government has changed the fringe-benefit tax rates for motor vehicles, with EVs and hybrids to attract lower rates than petrol and diesel engines from next April.
Drive Electric says that will encourage businesses to purchase EVs over other vehicles, meaning more second-hand EVs will flow into the market, as fleets are turned over.
Instead of the existing rate of 20% across all types of vehicles, petrol and diesel cars will attract fringe benefit tax of 22.8%, while electric vehicles will now pay a lower rate of 17%. Hybrids will pay 19.6%.
Drive Electric chair Kirsten Corson said her organisation was "super excited" by the change.
"It's an important and significant demand-side policy."
A $60,000 EV attracting full fringe-benefit tax would now pay $1800 less a year than it previously had, while an equivalent petrol or diesel car would pay $1680 more.
"That's significant, when you look at it from a total cost-of-business perspective, which is how fleet [managers] look at it," Corson said.
Businesses purchased 60-70% of new cars in New Zealand every year, so it would have an immediate effect on the number of electric vehicles in New Zealand, she said.
More than that, though, the 3-5-year turnover of most business vehicles would improve the availability and affordability of EVs for private buyers.
"The thing that oftens gets [heard] is average Kiwis saying, 'We'd love to get an EV, but we can't afford one'," Corson said.
"We do expect to see a lot more EVs flowing into the business fleets, which is what we need to create that second and third-hand market to make EVs affordable for everyone."
A perceived loophole in fringe-benefit tax rules - which led many to believe utes were automatically exempt - had already been clarified by Inland Revenue last year, she said.
Together with a simplified system for working out what proportion of a vehicle's cost was subject to the tax, that had removed any incentive for petrol and diesel vehicles over electric and hybrid, she said.
Transport contributes about 18% of New Zealand's total greenhouse gas emissions.
Drive Electric was now pushing political parties to adopt a scheme similar to one in Australia, where employees could use their pre-tax income to lease an EV through a salary sacrifice, which would also be exempt from fringe-benefit tax.
"That would make a really big difference for middle and lower-income New Zealanders to get the opportunity to drive EVs."
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