The government is planning to reduce the commodity tax on liquefied petroleum gas (LPG)-powered hybrid cars to encourage consumers to buy the less-polluting vehicles, with the Executive Yuan passing a draft amendment yesterday as the first step to eventually legalizing the tax cut.
The draft, which calls for lowering the commodity tax on LPG hybrid vehicles for five years by NT$25,000 per vehicle, is expected to also encourage the local automobile industry to develop or import more environmentally friendly cars, officials said.
At present, none of the nation’s carmakers produces or imports hybrid cars, which in Taiwan are mostly modified by local carmakers from cars that use regular gasoline or diesel, officials said.
Premier Wu Den-yih (吳敦義) said that promoting high-efficiency and low-pollution vehicles is a major government policy, adding that the government’s aim is to decrease air pollution and achieve the target of reducing carbon emissions.
Wu said the Cabinet would like to complete legislative procedures as soon as possible.
The Ministry of Finance and the Environment Protection Administration (EPA) will coordinate with lawmakers on the matter.
The commodity tax reduction for hybrid cars is expected to be launched next year, media reports said.
Under the current Commodity Tax Act (貨物稅條例), automobiles with engine displacement under 2000cc are taxed on an ad valorem basis at 25 percent of the factory price; while autos with more than 2,001cc are taxed at 30 percent.
The Finance Ministry estimated that the tax incentive would create demand for 5,200 hybrid cars, but that the government will receive NT$136.5 million (US$4.19 million) less in tax revenue in the five years time.
EPA data from Nov. 10, there are 21,050 hybrid cars in Taiwan.
EPA Minister Stephen Shen (沈世宏) said on Wednesday that he expected the number of LPG hybrid vehicles in Taiwan to reach 150,000 by 2012.
A modified LPG hybrid car can save 40 percent on fuel cost and reduce carbon emissions by at least 30 percent, Shen said.