British Columbia

B.C.'s latest tax incentive for zero-emission vehicles welcomed, despite low inventory

British Columbia has added another incentive for people to make the switch from vehicles running on fossil fuels to those that use electricity or hydrogen — but current supply issues might make it difficult for buyers to take advantage.

PST will no longer be charged on the purchase of used ZEVs, but supply issues mean there aren't many available

A hybrid Chevrolet Volt at a charging station in May 2019. As of the end of 2021, more than 11 per cent of vehicles sold in British Columbia were zero-emission vehicles. (Evan Mitsui/CBC)

British Columbia has added another incentive for people to make the switch from vehicles running on fossil fuels to those that use electricity or hydrogen — but current supply issues might make it difficult for buyers to take advantage.

On Tuesday, the province announced several new tax measures to meet the goals of its CleanBC climate action plan, which requires that 26 per cent of all new passenger vehicles sold in the province be zero-emission vehicles (ZEVs) by 2026, scaling up to 90 per cent by 2030 and 100 per cent by 2035.

The measures include an exemption from paying provincial sales tax (PST) on used ZEVs, effective Wednesday, and raising the passenger vehicle surtax threshold for ZEVs from $55,000 to $75,000.

To qualify for the PST exemption, vehicles must have been driven at least 6,000 kilometres.

ZEVs include battery electric, plug-in hybrid electric and hydrogen fuel-cell vehicles.

The province said in its 2022 budget that the PST exemption on ZEVs would cost $21 million this year and $29 million next year, but would help boost sales from people who want an electric vehicle but can't afford a new one.

"While most people want to make the right choice by the environment, it isn't always the most affordable option," said Finance Minister Selina Robinson in presenting the budget.

However, it's a "challenging time" to get hold of a ZEV, said Blair Qualey, the president and CEO of the New Car Dealers Association of B.C.

"All you need to do is go by any dealers' lot and see it's quite empty, unfortunately, at the moment," he said.

Daniel Breton, president and CEO of Electric Mobility Canada, the national voice of electric vehicles in Canada, says supply issues due to the pandemic and other factors have caused a reduction in the availability of new vehicles — and, in a knock-on effect, used ones.

He's hopeful, though, the new tax exemption in B.C. will help people afford used ZEVs before it expires in February 2027.

"I think that the present shortage will go away eventually and it will help people who can't afford a new EV, or do not want to pay for a new EV, it will make it easier," he said.

Electric vehicle chargers at a parking lot in Surrey, B.C. (Ben Nelms/CBC)

For 10 years, the province has offered rebates up to $3,000 for the purchase of new ZEVs, while Ottawa has a similar program worth up to $5,000.

The B.C. non-profit society Scrap-It also offers rebates to people who scrap their conventional vehicles and purchase a new or used electric, or plug-in hybrid vehicle.

Experts say B.C.'s ZEV mandate, passed into legislation in May 2019, along with purchase rebates, as well as those for installing charging stations, have pushed the province to the forefront of ZEV ownership in Canada.

"We've already done the heaviest lifting by putting that policy in place," said Jonn Axsen, director of SFU's Sustainable Transportation Action Research Team. "As long as we have that ZEV mandate, things are going to happen in the right direction."

The New Car Dealers Association of B.C. says 12 per cent of all new vehicles sold in the province are ZEVs, while Statistics Canada said ZEV registrations in the third quarter of 2021 increased 38.5 per cent compared with the same period in 2020.

Conversely, new registrations of gasoline-powered vehicles declined 15.9 per cent.

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