Tax incentives for fuel efficient cars and penalties for gas guzzlers introduced in the federal budget could make hybrid cars move faster off the lot, says a P.E.I. car dealer.

Dave Clark, owner of Clark Toyota in Summerside, says the federal incentives will add to an existing sales tax incentive on P.E.I.

"We have the up-to-$3,000 provincial sales tax incentive on P.E.I.; a lot of provinces don't even have that yet," said Clark.

"With that $3,000 provincial sales tax credit and, for example on our Toyota Prius, another $2,000 federal credit, now all of a sudden that car will become quite a bit more popular, and maybe we'll see increased sales of that car this year."

Clark said his company sold about a dozen hybrid cars in 2006.

The new federal budget introduces levies of $1,000 to $4,000 for vehicles that are the least fuel efficient, along with rebates of $1,000 to $2,000 for the most fuel-efficient models, or those that use less polluting fuels.

Under the federal incentives, vehicles that consume more than 13 litres per 100 kilometres will face penalties. New cars with a combined fuel consumption rating of 6.5 litres per 100 kilometres or less and minivans, SUVs and other light trucks with a rating of 8.3 litres per 100 kilometres will be eligible for rebates.

Critics of the plan say while incentives are a good idea, the government's plan covers only a small part of the premium consumers are expected to pay for fuel-efficient vehicles.

The federal tax incentives and penalties are effective immediately.