Budget (1) — Why your Prius just got cheaper, but a Hummer costs what it always did

I’m not a huge fan of the rebates and levies the Conservatives announced in today’s budget to promote fuel-efficiency in cars — it seems to me that if they want to cut down on tailpipe emissions, they should hike taxes on the offending substance: gasoline. If you buy a beast of a machine and leave it sitting in your driveway, what do the rest of us care? Whereas if you’re taking your little Yaris on joyrides around the local racetrack every weekend, that’s the kind of thing the government would hope to discourage.

But then hiking gas taxes is a political non-starter no matter how justifiable it is, as the last Conservative minority government found out, so I can see why they did what they did.

Specifically, Jim Flaherty’s budget promises a rebate of up to $2,000 on fuel-efficient new cars and a special levy on inefficient ones of up to $4,000. What I do like is that this is technology-neutral. One way to get good mileage is to buy a car with a hybrid engine, but you can get the benefit just by buying a super-small vehicle if you’d prefer. That’s a nice touch.

That said, I’m skeptical of the government’s estimate that the levy on gas-guzzlers will bring in $110 million this year.

You have to work pretty hard to buy a passenger vehicle so fuel-inefficient that the government will charge the levy on it. The penalty kicks in when a vehicle uses more than 13 litres of gas to go 100 kilometres; even a 2007 Hummer only uses 16.3 litres in city driving, according to Natural Resources Canada’s Autosmart tool, and a mere 11.2 litres if you’re zipping along the highway in it. I’m not even sure a Hummer qualifies, because the budget documents say that trucks are exempt; NRC classifies a Hummer as a “special-purpose vehicle.”

The most inefficient Porsche burns 14 l/100km in city driving, but it’s so efficient on the highway it drops well out of levy territory. The only mass-market cars that I can find that would qualify are Ford Crown Victorias and Grand Marquises, in there with some exotic Ferraris and Bentleys.

They’re also scrapping the excise tax on heavy vehicles, which charged a fee on passenger cars weighing more than an awesome 2,000 kilograms or so. As with the neutrality on the question of hybrids, this seems like a good idea: if somebody devises a  7,000-pound monster that runs on dreams and fairy dust, let ’em buy it.


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