MR CHAN KIN-POR (in Cantonese): Deputy President, in my capacity as the Chairman of the Bills Committee on Revenue (First Registration Tax and Licence Fees for Motor Vehicles) Bill 2021 (“the Bills Committee”), I submit the Committee’s Report to this Council.
The Revenue (First Registration Tax and Licence Fees for Motor Vehicles) Bill 2021 (“the Bill”) seeks to amend the Motor Vehicles (First Registration Tax) Ordinance (Cap. 330) and the Road Traffic (Registration and Licensing of Vehicles) Regulations (Cap. 374E) and to give effect to the proposals made by the Financial Secretary on 24 February 2021 in the 2021-2022 Budget, that is: to increase the first registration tax (“FRT”) rates and the vehicle licence fee (“VLF”) for private cars by 15% and 30% respectively from 11:00 am on 24 February 2021. At the same time, the Bill also makes a consequential amendment to the Road Traffic (Registration and Licensing of Vehicles) (Amendment) (Fee Concessions) Regulation 2019.
The Bills Committee has held two meetings with the Administration to scrutinize the details of the Bill. Moreover, the Bills Committee has also invited written views from the public on the Bill.
Members held different views on the Bill. Some members considered the increase reasonable, having regard to the fact that the FRT rates and VLF levels for private cars had not been increased for many years. Nevertheless, some members were deeply concerned about the substantial increase of the FRT rates and VLF levels for private cars. They considered such increase not opportune in view of the present economic situation. They urged the Administration to roll out more relief measures to support the trade during difficult times, since the increase in the FRT rates and VLF levels would aggravate the operating difficulties of the trade.
The Administration advised that the Bill sought to curb growth of private cars and to alleviate road traffic congestion at its roots by increasing the FRT rates and VLF levels for private cars. To ensure the efficient use of limited road space, the Government had been encouraging the public to use public transport instead of driving private cars for commuting. However, considering the existing private car fleet size and its continued rise, road traffic congestion would be further aggravated. To partly catch up with the inflation and taking into account such factors as public acceptability, the Administration had proposed in the Bill to increase the FRT rates and VLF levels for private cars as fiscal disincentives to curb car growth.
Some members considered that the Administration’s proposals to increase the FRT rates and VLF levels might not be effective in curbing the growth of private cars. They considered that the large franchised bus fleet might have in fact contributed more to the congestion problem. In addition, illegal parking and shortage of parking spaces for private cars and using of motor vehicles for illegal carriage of passengers for hire or reward were also major causes of road traffic congestion. While not fully convinced that the proposed increase in the FRT rates and VLF levels could reduce the growth of private cars in the mid- and long-term, members urged the Administration to formulate a comprehensive plan to tackle road traffic congestion effectively.
Furthermore, the Administration provided for members’ reference the numbers and growth of licensed private cars in the past 10 years as well as the annual vehicle-kilometres travelled by private cars. The information showed that in tandem with the continuous growth in the number of private cars, their usage had also been on the rise. The Administration therefore reckoned it necessary to take decisive measures to contain the growth of private cars. In addition, The Administration had all along adopting a multi-pronged strategy to alleviate road traffic congestion, encompassing efforts to improve transport infrastructure, manage the use of roads and enhance the public transport system.
Some members suggested deferring the effective date of the proposed increase in the FRT rates and VLF levels for private cars by one year, with a view to relieving the burden of vehicle owners and minimizing the impact on the relevant trades, or making provisions in the Bill so that the FRT rates in force immediately before the Commencement Time would continue to apply to private cars which had been imported into Hong Kong but had not yet been sold before 24 February 2021 and private cars which had already been shipped on board for export to Hong Kong in March 2021.
In response to the suggestion of deferring the effective date of the proposed increase in the FRT rates and VLF levels for private cars by one year, the Administration advised that it would in effect incentivize prospective private car buyers to make early purchases before 24 February 2022 in order to enjoy a lower tax rate or fee level. This suggestion, if implemented, would lead to a surge in car sales and hence a substantial increase in the number of licensed private cars in the next few months. The Administration understood that the proposed increase in the FRT rates might affect the sales of private cars, unavoidably causing adverse impact on the automotive retailing market. The Administration reiterated that the policy objective of the proposed increase in the FRT rates was to contain the overall private car fleet and its growth. The Administration also understood that the transport industry was facing significant difficulties in running business for the time being, a series of relief measures had been rolled out to support the industry.
Deputy President, the above is the report on the work of the Bills Committee. The following is my personal views on the Bill.
I support the Bill this time around. I understand that the increase will affect car owners and the car retail sector to a certain extent, but the FRT rates and VLF levels for private cars have not been adjusted for 10 and 30 years respectively, and the Government has also stated that the objective of the increase is to curb the growth of private cars. From the point of view of the community as a whole, we have no alternative but to accept the increase.
However, I believe that the increase in fees alone will not solve the traffic problem. The Government should also study other ways, and it should also balance different needs in the community. As a matter of fact, the Government should face squarely one issue, that is, due to the high property prices in recent years, many people have to move to new towns. As new towns are far away from the urban areas, it will naturally give rise to the need for private cars, which will unavoidable result in traffic congestion. Even though people living in new towns may use public transport to commute between their homes and workplaces, they would prefer to travel by private cars for holiday family activities.
The Government has been adopted a public transport-oriented policy with railway as its backbone. This approach is certainly reasonable. But as Hong Kong is a densely populated city, under this mindset, the Government should not underestimate the actual demand for private cars in the community and subsequently slow down the expansion of trunk roads, resulting in road capacities failing to meet the actual needs. The Government should address traffic problems with new technologies, including the use of smart traffic control systems and automated parking systems.
Moreover, people are also concerned about the impact on the transport industry. We can have good business prospects only if cross-boundary and cross-border travel is resumed which will help the economy recover. I believe the Legislative Council will urge the Government to improve the business environment and various supporting measures for transport infrastructures, which will hopefully facilitate the development of the industry. Thank you, Deputy President.