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Will cars go green under the ACT’s reformed vehicle purchase tax?
Published on 01 Feb 17 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
This article revisits the Australian Tax Forum research article, “Will cars go green in the ACT?” (2015). The Australian Capital Territory was the first jurisdiction in Australia to reform its vehicle purchase tax/duty on the basis of new vehicles’ “environmental performance”, in what was known as the Green Vehicle Duty Scheme (GVDS). The analysis of that tax instrument in 2015 concluded that it was not environmentally effective in influencing car purchasing trends towards lower CO2-emitting vehicles. A later reform of the GVDS, reflecting the federal government’s “Green Vehicle Guide”, replaces the GVDS with a new instrument, the Vehicle Emission Reduction Scheme (VERS), which commenced on 29 June 2015.1
This article considers whether the VERS instrument might usefully be adopted by other state and territory governments to improve fuel efficiency and reduce CO2 emission from light vehicles. It concludes that the tax design and price signal reforms set out in the VERS do not promote environmental performance better than its predecessor GVDS.
