Electric cars tax breaks, but new alternate levy

Just as Barbadians have a right to education, homeowners will have the right to install photovoltaic systems on their roofs to produce up to 10 kW of energy, eliminating the burden of a bureaucracy of processing tens of thousands of applications.

Moreover, a two-year tax holiday is starting next month to cut the cost of electric and hybrid vehicles to incentivise Barbadians to purchase these cars.

In her first Budget presentation in two years, Prime Minister Mia Mottley outlined her government’s aggressive push towards renewable energy to reduce dependence on imported fossil fuels and to meet the country’s strategic goal of carbon neutrality 2030.

However, anticipating revenue loss due to the measure, the Mottley announced a new “alternate fuel levy” of $25 per month or $300 annually for vehicles not powered by diesel or gasoline from July.

As a result, Government will require the re-registration of all electric vehicles on the island.

With the conflict in the Ukraine, following Russia’s invasion of that country, global energy prices are rising steadily, and Mottley said it was critical to swiftly increase the island’s green energy capacity.

“Green energy transition is a fundamental pillar of our growth strategy over the medium term, a strategy that seems ever more relevant, given the conflict in the Ukraine and the doubling of oil prices in just 12 months,” she told the House of Assembly yesterday.

She also highlighted the clean energy bridge that was commissioned by the Barbados Light & Power which is expected to save the island $60 million annually in imported fuel.

Turning her attention to clean energy vehicles, Prime Minister Mottley disclosed that Government workers who are allowed to borrow up to $50 000 interest-free for vehicle purchase, will now have that increased to $100,000 if they purchase an electric or hybrid vehicle.

The $50 000 limit will remain in place for diesel and gasolinepowered vehicles. She hinted that this provision for diesel and gas vehicles could be eliminated in light of our 2030 decarbonisation commitments of the island and government’s own policy for the purchase of electric vehicles for ministries and departments.

“The Government is now prepared therefore to announce that an excise tax and VAT holiday will be placed on electric vehicles for 24 months commencing on the April 1. This will further encourage Bajans to adopt and adapt to the rapidly changing environment. This means Bajans will only pay the import duty of 10 per cent for the next two years on the purchase of electric vehicles”.

“We hope that this will also encourage the private sector to accelerate the development of the charging network that is so critical.”

In her Budget presentation Mottley announced an “alternate fuel levy” for vehicles not powered by diesel or gasoline.

“Owners of these alternate powered vehicles will be required to pay $25 per month via direct debit or standing order on the 15th day of each month or they can pay $300 each year one time.”

She added: “The variable portion of the levy which will be charged at a rate of $0.02 per kilometre above a 15,000 km quota that we give everyone.”

This, she noted should amount to about $60 for use of the road for the 12-month period. The Finance Minister said Government will be working with general insurance companies to execute the levy and monitor the mileage. However, she noted that selfcompliance was an option available with stiff penalties for providing false information.

And in a measure intended to help operators of hired vehicles who were severely impacted by the COVID-19 pandemic, Prime Minister Mottley announced: “To aid in that process of re-fleeting to pre-pandemic levels, the government proposes to allow authorised operators of car rental companies to pay 50 per cent of the licence and permit fees upfront in order. The remaining 50 per cent will be paid within 12 months of registration given that the vehicles are revenue generating for the companies. This measure will take effect from April 1, 2022 and will be available to the sector for 18 months.”

A measure to assist taxi operators and PSV owners is to be announced shortly, she also disclosed. (IMC1)