Hybrid Tax U-Turn Yields Results
After cutting the special tax on small-engined hybrid cars on June 1 2012 and introducing incentives for scrapping older vehicles, the Jordan Customs Department (JCD) has reported that 620 used cars have been replaced with hybrids. This supports the view put forward by BMI when the tax was introduced in 2010, that there is growth potential in Jordan's hybrid market, which would be hampered by the taxes ( see our online service, July 12 2010, ' Hybrid Tax Will Hit Both Industry And Treasury') .
Up until April 30 2010, hybrids were exempt from special taxes. The reaction to the imposition of a 55% tax was evident in data from the JCD, which showed imports of alternative fuel vehicles rising to 6,287 units in H110, compared with 515 the previous year, as customers tried to beat the introduction of the tax. A further threat to the uptake of hybrids came from the uncertainty surrounding the government's policy, as reports emerged that the tax would be reconsidered, leaving consumers unsure about whether to go ahead with purchases.
On June 1, the tax was cut from 55% to 25% for hybrids, while a further reduction to 12.5% was introduced for consumers scrapping a vehicle of 10 years old or more. This addresses another issue arising from the tax, which is the aging vehicle fleet. By the end of 2010, the average age of registered cars was 12 years old.