Making Low Emission vehicles more attractive

Last week, I posted on how making low emission vehicles more attractive for businesses would be a better choice for policy makers than banning car parks and cars.

I finally did the maths - and my figures support the notion that companies are better off financially choosing regular vehicles becuase of the FBT calculation - which is the lower of 20% of a vehicles purchase price or 36% of it's book value.

So for a brand new Prius, FBT is $8730 p.a. (List price $43650). For an equivilant 2 litre Ford Focus the FBT is just $6398 p.a. (List price $31990). While a Prius is more frugal at 4.4 Litres per 100km travelled it would have to travel almost 40000km per year to make up the difference - quite a lot, considering the average New Zealander only manages 12000km per year - so you need to do about 133km per day more than average to get any benefit.

But if you cut the FBT by 25% (15% of price) it wipes out the FBT cost - making low emission vehicles more attractive. Plus you get benefits of more second hand vehicles being available to private buyers.

I know this isn't easy to implement, but I still think it's better than just making everyone catch a bus.