In an effort to encourage the adoption of environmentally friendly modes of transportation, the New Zealand government has introduced new tax exemptions for electric bikes and scooters. This move is part of the country's wider goal to reduce carbon emissions and combat climate change. In this Eyes on Tax article, Mark Lodder, BDO Tax National Leader, explains the details of these tax exemptions and their potential impact on the environment and the economy.
Under the new rules, electric bikes and scooters will be treated the same as traditional bicycles when it comes to tax. This means that they will be exempt from fringe benefit tax (FBT) and road user charges (RUC). FBT is a tax on non-cash benefits that employers provide to their employees, while RUC is a tax on the use of public roads and is typically applied to heavy vehicles such as trucks and buses. By exempting electric bikes and scooters from these taxes, the government hopes to make them more accessible and affordable to consumers.
This move is part of the government's wider push to encourage the use of low-emission vehicles. In addition to the tax exemptions for electric bikes and scooters, the government has also introduced subsidies for electric cars and increased funding for public transport. These measures are aimed at reducing the country's greenhouse gas emissions and meeting its commitments under the Paris Agreement on climate change.
The new tax exemptions for electric bikes and scooters are expected to have a number of benefits. For one, they will make these modes of transportation more affordable for consumers, which could encourage more people to switch from cars to electric bikes and scooters. This, in turn, could lead to reduced traffic congestion and improved air quality in cities. It could also help to reduce the country's dependence on imported oil, which could have economic benefits in the long run.
Furthermore, electric bikes and scooters are seen as a more sustainable mode of transportation than traditional cars. They emit fewer greenhouse gases and require less energy to operate than cars, making them a more environmentally friendly option. By encouraging the adoption of electric bikes and scooters, the government hopes to reduce the country's carbon footprint and promote sustainable development.
However, some critics have argued that the tax exemptions may not be enough to encourage widespread adoption of electric bikes and scooters. They point out that many consumers may still prefer cars for longer journeys or in areas with limited public transport options.
Despite these concerns, our view is that the new tax exemptions for electric bikes and scooters represent a positive step towards reducing carbon emissions and promoting sustainable transportation in New Zealand (it’s almost impossible to please everyone!). By making these modes of transportation more affordable and accessible, the government hopes to encourage more people to choose electric bikes and scooters over traditional cars. Over time, this could lead to a shift in transportation habits and a more sustainable future for New Zealand.
Talk to your local BDO adviser today about any tax exemptions you may be eligible for.