Legislative Council meeting Bill 2nd Reading – Revenue (First Registration Tax and Licence Fees for Motor Vehicles) Bill 2021

Revenue (First Registration Tax and Licence Fees for Motor Vehicles) Bill 2021

MR CHAN CHUN-YING (in Cantonese):

Deputy President, given that Hong Kong is a small and densely-populated city, the Government has adopted a multi-pronged strategy over the years that encompasses efforts to improve transport infrastructure, expand and enhance the public transport system, and introduce fiscal measures such as the first registration tax (“FRT”) and annual licence fees (“ALF”) for vehicles, in an attempt to alleviate traffic congestion in Hong Kong. It has also been encouraging the public to take public transport as far as possible to ensure the efficient use of limited road space. However, during peak hours, it feels like walking must be faster than driving in certain road sections or areas, such as Tuen Mun Road, Tolo Highway, the Kwun Tong Industrial Area or the old Cross-Harbour Tunnel.

The enormous size and continuous growth of vehicles is a major contributor to road traffic congestion. The Transport Advisory Committee issued a report on road traffic congestion in 2014, which considered that increases in FRT and ALF were the most direct and effective means to suppress car growth. Yet, the effects appeared to be rather short-lived and depended on the level of increase. For instance, the number of newly registered private cars plunged immediately following the doubling of FRT and tripling of ALF in 1982. Yet, the number began to rebound in 1985. When FRT and ALF were increased again in 1990 and 1991, the number of newly registered private cars rose rather than fell. After the last FRT increase in 2011, FRT rates already ranged from 40% to 115%, but there was only a short-lived slowdown of growth in the number of newly registered private cars. From 2010 to 2020, the number of licensed vehicles increased substantially by about 32% from about 609 000 to about 803 000. Amongst the newly added vehicles, 80%, i.e. around 160 000, were private cars. As a result, the number of licensed private cars substantially increased by about 38% during the above period from about 415 000 to about 573 000. Moreover, the annual vehicle-kilometres travelled by private cars increased considerably by 41% in the past 10 years, while that travelled by buses and light buses remained fairly stable during the same period. This shows that in tandem with the growth in the number of private cars, their usage has also been on the rise.

Deputy President, FRT has not been adjusted for 10 years since the increase in 2011, and ALF, as mentioned by some Members earlier, has not been increased for 30 years since it was increased in 1991. Since then, the Composite Consumer Price Index has increased by 28% and 113% respectively, whereas the median monthly income of households has increased by 46% and 218% respectively. The lack of timely adjustments to FRT and ALF has undermined the effectiveness of the fiscal disincentives to curb private car growth. As a result, traffic congestion persists.

Government figures show that the number of licensed private cars has increased by 5 000 in the first three months of this year and now stands at a record high of 578 000. At this rate of growth, it is estimated that nearly 20 000 private cars will be added this year. Therefore, if we do not act decisively to curb the growth trend, we will face even greater challenges in the implementation of measures to alleviate traffic congestion in the future.

In fact, many major cities have their ways to deal with traffic congestion. For example, apart from a variety of vehicle taxes, London has implemented its London Congestion Charging Scheme since 2003, under which a daily rate of about HK$140 is charged for driving into the charging areas during the charging period. Beijing introduced the “odd-even scheme” prior to the Olympic Games in 2008 and then rolled out a vehicle quota system based on lottery in 2011 to directly cap the growth of private cars. Singapore has also put in place a similar vehicle quota system, coupled with the upward adjustment of taxes and introduction of electronic road pricing; since the implementation, the growth in private cars has continued to decline, achieving the goal of long-term control of the growth in the number of vehicles.

It is therefore my hope that, apart from continuing to use fiscal tools and other measures, the Government can actively draw on the successful experience of other regions and take into account the actual circumstances of Hong Kong to adopt various measures that can help alleviate traffic congestion, including, of course, tackling the problem of “white licence cars” mentioned by Mr Frankie YICK.

Deputy President, curbing the overall number of private cars and their growth is fundamental to relieving traffic congestion. Raising FRT and ALF, which have not been adjusted for many years, is a necessary and effective fiscal measure. Therefore, I support the passage of the Bill. As for the amendments, a one-year postponement of implementation, or exemption for vehicles shipped before the tax increase, would lead to a surge in vehicle sales during the transition period, or as Mr Tony TSE mentioned earlier, the unfairness caused by the differences in the number of vehicles pre-ordered by individual car dealers, and would not achieve the originally intended effect, so I will not support them.

I so submit. Thank you, Deputy President.