The Ecoauto Rebate Program announced in last year’s federal budget never made a full circle of the track.
The program was for people who, starting March 20, 2007, bought or leased new cars officially designated as gas sippers.
The rebate was to be $1,000 to $2,000 depending on the model’s fuel consumption ratings.
The government has since contended that the program isn’t working as intended and has terminated the rebates for cars bought after December 2008. Buyers can apply until March 31, 2009, for rebates on purchases made during 2008.
Perhaps one reason the program didn’t work well is that four months after it was announced, not a single rebate had been paid. The federal bureaucracy set up to handle the program was drowning in its own paperwork.
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Payment delays of up to eight months are the norm, which seems extraordinarily slow even for the federal government.
The program also included a “green levy” excise tax of up to $4,000 on the purchase of gas guzzlers. That part of the program, to no one’s surprise, has been kept but may not be any more effective than the Ecoauto rebate.
The stick that seems to be driving the purchasing decisions of consumers is the high cost of fuel. At least one Canadian financial guru predicts fuel prices will reach $2.25 a litre by 2012. Auto dealers are finding their used car lots full of trucks and sport utility vehicles for which there is little demand. Prices of these vehicles are collapsing, leading General Motors to announce the closure of four truck factories in North America, including one in Ontario.
However, not everyone says eco incentive programs are failures.
Manitoba claims its program to stimulate the purchase of hybrid vehicles is a resounding success. Since it was introduced in November 2006, the number of hybrid vehicles on Manitoba roads jumped by more than 50 percent.
Perhaps one reason the Manitoba program was more successful is its simplicity. Manitobans filled out a one-step application at the time of vehicle registration and the government immediately sent them a $2,000 rebate cheque. Perhaps there is an object lesson here for all governments – keep it simple.
Ontario has increased the rebate of provincial sales tax on the purchase of qualifying vehicles to a maximum of $2,000 from the previous limit of $1,000 for purchases made after March 23, 2006, and before April 2012.
British Columbia had scheduled a reduction in its maximum sales tax rebate to $1,000 from $2,000 as of April 2008, but it has since decided to extend the higher rebate levels for purchases and leases before April 2011.
However, the province is also phasing in a carbon tax starting July 1 that will add 2.41 cents per litre to the cost of gasoline, rising gradually to 7.24 cents per litre by 2012.
Larry Roche is a tax analyst with farm taxation and planning specialists Farm Business Consultants Inc. He can be contacted at fbc@fbc.ca or call 800-860-7011.
