Feebate program works well, automakers complain

Also in today’s Globe, a lobbyist for the Big Three makers of big cars complains about the federal feebate system (extra taxes on gas guzzling cars, a tax rebate on highly efficient ones) working exactly as it’s supposed to:

The Canadian Vehicle Manufacturers Association also cautioned that Ottawa’s scheme to subsidize more fuel-efficient cars is distorting the market, sending more than two-thirds of the cash to Toyota Canada Inc. buyers, half of which will reach purchasers of a single model, the Yaris.

Ottawa expects to extract $110-million annually by a levy slapped on purchases of so-called gas guzzlers — about $55-million of which will come from autos sold by the Big Three U.S.-based auto makers.

That number is a bit of a red herring — what matters is the cars the Big Three don’t sell, not the money raised from the buyers of the cars they do. Nevertheless, the solution is clear and to his credit, Finance Minister Jim Flaherty offers it: Make cars that qualify.


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