New Canadian budget includes fuel economy carrots and sticks
Canadian Finance Minister Jim Flaherty unveiled a new budget in parliament this week, and it includes incentives for Canadians to drive greener vehicles. The Vehicle Efficiency Incentive will provide a tax break of up to $2,000 to people who buy more fuel efficient vehicles, no incentives or penalties to purchasers of vehicles with average fuel economy and a new tax on gas-guzzlers. The Transport Canada combined fuel economy ratings of new cars will be compared to thresholds to determine if they get rebates or new taxes. Cars that get ratings of better than 36 mpg will get a break as will vans, SUVs and other light trucks that get better than 28.3mpg. The rebates will range from $1,000 up to a maximum of $2,000 based on how much beyond the threshold they achieve. There is also a $1,000 rebate for E-85 capable vehicles.
Passenger cars that get less than 18mpg will be charged an extra $1,000 and that will increase in thousand dollar increments up to a maximum of $4,000 for cars that get less than 14.7mpg. In addition to the sticks and carrots for new cars, the budget also allocates $6 million for expanding programs to scrap older cars that use more fuel and emit more pollution. These are the kinds of programs that could help enhance the benefit of any fuel economy standard increases in the United States, because it addresses the demand, rather than just the supply.
[Source: Canadian Driver, thanks to Paul and TJ for the tip]
Reader Comments (Page 1 of 1)
Phil L. 3:13PM (3/21/2007)
I appreciate what they're doing - but I can also imagine the complaints this sort of thing would generate in the US.
Yes, the family with 7 kids that lives at the top of a dirt road probably doesn't have an extra $4K laying around, on top of the cost of a Suburban.
What to do? Make them move?
More likely: They'll keep their old Suburban on the road. Another example of the law of unintended consequences.
I'll be curious to hear the reaction of the typical Canadian driver...
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moogy 6:36AM (3/22/2007)
This is very good news for all of us.
I am a Canadian
"The people with seven kids can keep what they have or buy some used truck for now." They can also buy a diesel.
This will make the sale of American gas-guzzlers harder and make the big three think it over...
We are not a big country, but we have are own ways... good or bad.
Bombardier... When are you going to make some Canadian cars... hint hint.
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MetroMPG.com 5:13PM (3/21/2007)
What I'm going to be watching is whether industry responds to the program.
EG: the Honda Fit, with a manual transmission, missed the $1000 rebate eligibility by just 0.1 L/100km.
Will Honda respond by offering improved choices here?
A transmission option with a taller final drive or top gear ratio would be a relatively easy fix that would bump the car over the threshold.
Will GM attempt to address the relatively pathetic fuel efficiency performance of its Chevy Aveo/Pontiac Wave twins, which missed the eligibility by a wide margin (1.0 L/100 km)?
It's interesting to note that the $1K rebate as applied to a base Yaris 3-door brings its price just below that of a base Aveo. I'd expect this is going to tip the balance of sales sharply towards the Yaris.
On the 'stick' side of the equation, there are probably some guzzlers which fall just over their threshold, and could be moved into a lower penalty, or into neutral territory with a slight improvement in efficiency.
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ch02ce 11:57PM (3/21/2007)
I welcome these initiatives. All over this continent there are far too many SUVs roaming around being underutilized for what they were designed for. This should weed out customers who buy these vehicles for senseless reasons. Less enormous vehicles on the road means higher safety for me and my future fuel efficient small car.
The US needs to suck it up and do the same thing.
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Phil L. 8:55AM (3/22/2007)
>>> They can also buy a diesel.
Not in the US, we can't. OK - there are now a few diesels on the road - but nothing terribly family friendly (I was hoping to see a BlueTec Grand Caravan someday - looks like DCX will revert to Daimler Benz before that happens). And certainly no family-friendly vehicles that can seat 9.
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Sam Abuelsamid 9:32AM (3/22/2007)
From the available information, it appears the penalties will only apply to passenger cars. So people buying Vipers or M5s will pay a tax while Caravan or Suburban owners would not. That way the bigger vehicles that can haul around the brood or soccer team would probably not qualify for a rebate, but at least they wouldn't pay an extra tax.
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MetroMPG.com 11:40AM (3/22/2007)
Sam - there does seem to be a bit of confusion on the topic because the budget document describing the program specifically exempts "trucks" from the guzzler tax.
That said, the media here are widely reporting that the program will in fact apply to SUV's, and that the "truck" exemption actually means "pickup trucks".
Several leading industry analysts have been quoted saying the same thing, including one who produced a fairly comprehensive list of vehicles affected by the various tiers of the levy:
http://www.canadiandriver.com/news/070321-1.htm
One other thing that leads me to think that SUVs are not exempt is that the proposed guzzler tax will also replace a previous tax on heavy vehicles (over 5,000 lbs). Not too many passenger cars would have been affected by that, though more than a couple of SUVs are above that weight.
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MetroMPG.com 7:26PM (3/22/2007)
Not conclusive, but:
"The following information was contained in a release made by the Canadian Auto Dealers Association. It sets out the details surrounding the new levies on vehicles announced in the Federal Budget and who qualifies for rebates."
[...]
"This levy does not apply to trucks, only passenger vehicles. While the definition of “truck” Is not included in the budget documentation, according to the Ministers office – Pick-Up Trucks are not intended to be affected by levy – only SUVs and other larger, fuel Inefficient vehicles."
http://tinyurl.com/39h8kb
Or, give your recipients confidence with a preview TinyURL: http://preview.tinyurl.com/39h8kb
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Thomas Brown 7:31PM (3/22/2007)
I read the National Post a few days ago and it stated that only NEW vehicles are slapped with the levy. So go out and by a 2006 Suburban (or H2 or Escalade or whatever) and you'll save the $$$$ levy, not to mention that buying a 2006 will be a couple grand cheaper to begin with.
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MetroMPG.com 12:06AM (3/23/2007)
You're right on that point.
Also, vehicles currently in stock at dealerships as of the day the program was announced (and prior) are exempt from the guzzler tax. So anyone with a determined hankering for a brand new, super thirsty vehicle may still have the opportunity to avoid the penalty.
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Greg 5:48AM (3/25/2007)
Anyone know why the smart fortwo does not qualify? See the official list of vehicles: http://www.tc.gc.ca/programs/environment/ecotransport/ecoauto.htm#2007vehicleflexfuel
Since the smart gets something like 4.2 L/100km, it beats every other vehicle in the category for fuel efficiency except the Prius. This seems like a major oversight. I suspect it is a model-year issue, but still seems ridiculous when you see the ethanol gas-guzzlers get a $1000 rebate when NO ETHANOL FUEL IS AVAILABLE IN CANADA.
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mxs 5:47PM (3/26/2007)
I agree that there's something seriously wrong with this rebate program.
What happened to all VW TDI diesel models. Is this a joke or Canadian government pushing their agenda ..... without really knowing what's going on (or perhaps knowing too much ..).
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Greg 2:36AM (3/27/2007)
I have confirmed with Smart that their cars are still considered 2006 models, and hence do not qualify under the program as announced. This is the issue for the VW diesels, which are also 2006 models.
However, there is a "but..." at the bottom of the government's announcement: "New 2006 vehicles that have never been registered for use in Canada, and meet the program’s fuel consumption criteria will be eligible. A complete list of eligible 2006 vehicles will be posted in the near future."
They are awaiting news from Transport Cda.
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Greg 3:34AM (4/10/2007)
They have just announced which 2006 models will qualify, list is more than half diesels. Smarts and most VW diesels qualify - the 2006 model years have been added. They are mostly diesels. In fact, of the eight models that qualify for the maximum $2000 rebate, four are diesels - and if we remove double-counting (the eight involves Prius counted twice, Civic hybrid twice, Smart coupe/cabriolet twice), there are only five cars: Prius, Civic Hybrid, Smart, Beetle TDI, Golf TDI.
Check out the full 2006 list now at:
http://www.tc.gc.ca/programs/environment/ecotransport/2006ecoautoeligibility.htm
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