Submission to Bills Committee of Legislative Council on Motor Vehicles (First Registration Tax) (Amendment) Bill 2011
6 May 2011
Thank you for your invitation to attend the Bills Committee on 12-May-2011, which I accept. This paper, including the attached article "Traffic Truths" (13-Apr-2011), forms our submission. In addition to the points made in the Article, we wish to make the following observations on subsequent documents submitted to you by the Administration:
- In the LegCo Brief, the Administration noted that in 2010, a total of 41,240 private cars were newly registered, an increase of 45% over 2009 and 20% over 2008 "before the financial tsunami". This is alarmist, false and misleading. False, because 2008 was not before the financial tsunami. Bear Stearns almost collapsed and was taken over by JP Morgan in March 2008. Lehman Brothers filed for bankruptcy on 15-Sep-2008. The Hang Seng Index dropped 48% in 2008.
- A fairer comparison would be to look at new car registrations in 2-year periods, 2009-2010 compared with 2007-2008. The worst of the financial crisis was from Sep-2008 to Mar-2009, so each of these 2-year periods includes 3 months of the peak crisis. Then you will see that new registrations in 2007-2008 were 67,738 and in 2009-2010 they were 69,672, an increase of only 2.9%. The surge in 2010 was largely a catch-up effect due to people who delayed purchases from 2009.
- Similarly, due to deregistrations, the net increase in registered private cars was 27,306 in 2007-08 and 28,338 in 2009-2010, an increase of only 3.8%.
- We note from Annex VI of paper CB(1)1780/10-11(01) that the Government's fleet of cars, which are not included in the statistics, increased by 14.7% from 1,151 in 2008 to 1,320 in 2010, while the private car registered fleet grew 6.7% in the same period. Middle-ranking officials swanning around town in chauffeur-driven cars are hardly setting a good example towards reducing congestion. The Government is of course exempt from FRT, license fees and fuel taxes, because any tax is just a payment to itself.
- In the same paper at paragraph 10 on page 4, the Administration dismisses the case for congestion pricing (or to use their loaded term, "congestion tax") as "weak", without substantiating that view. It claims that "[a] road pricing scheme that aims to relieve traffic congestion can only be implemented equitably and effectively with the availability of alternative routes that have adequate capacity for motorists to bypass the charging zone." We disagree. An alternative route is not necessary if the object is to encourage people to enter the zone on mass transport (rail or bus) or to enter it at different times of day (for example, deliveries to shops and supermarkets can be made outside busy hours). The Government says we have to wait for the Central-Wanchai Bypass (CWB) before introducing a congestion zone - but clearly the CWB is not going to affect congestion in the Kowloon Peninsula. Congestion pricing is the key to limiting congestion and numerous "World Cities" have implemented it, but "Asia's World City" has not.
- Far from being weak, congestion pricing is the most sensible thing HK could do to reduce congestion. The Government's approach of increasing FRT to tackle congestion is incredibly weak and indirect, because it fails to tackle the core issue. It doesn't matter how many cars are registered, what matters is when and where people drive them. Once a person has bought a car, the decision on whether, when and where to use it is not affected by how much they paid for it, but on the costs of using it.
- In the same paper at paragraph 19 on page 6, the Administration notes that commercial vehicles (presumably including buses) are the major source of roadside air pollution in HK, accounting for about 95% and 88% of total vehicular emission of respirable suspended particulates and nitrogen oxides respectively, and that private cars only contribute 1% and 5% respectively (although they account for some 39% of vehicle km). Why, then, does the Government set fuel duty at zero on Euro V Diesel, which almost all of these commercial vehicles use? A substantive tax would incentivise more efficient use of the diesel-powered fleet. If the Government wishes to incentivise "railway as the backbone" for public transport, then the cost of bus journeys must be raised, by taxing diesel at no less than the rate of tax on petrol ($6.06 per litre) if not more.
- In the paper CB(1)1827/10-11(01), the Government states without elaboration or evidence that "traffic congestion in Hong Kong is closely related to the number of private cars". As our research in the attached article shows, there is only a distant connection between the two. From 2000 to 2009 (the latest available data), despite a 17.7% increase in the licensed fleet of private cars, the total kilometres they covered increased by only 1.1%, while the length of public roads increased by 7.7%. So each km of road had 5.8% fewer private cars passing over it on an average day in 2009 than it did 9 years earlier.
We remind you that the above points are supplemental to our main article attached.
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