‘Ute Tax’ targets farmers, tradies

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NICK.BROOK@nullcluthaleader.co.nz

From tomorrow, April 1, the so›called ‘‘Ute Tax’’ comes into force, meaning a sharp increase on the new›purchase price of the staple rural workhorse.

The financial penalty is motivated from two fronts, one of which is the IRD’s interest in businesses avoiding tax for work vehicles.

Since utes are not solely designed to transport people, they are exempt from the IRD’s Fringe Benefit Tax, leading to a major uptake of ‘‘high emission’’ utes by businesses to avoid tax owed when a work vehicle is also available for private use.

The second, more contentious reason for the new tax is to reimburse the Government’s Clean Car Discount initiative, a reward scheme whereby purchasers of low or no carbon›emission electric vehicles are eligible for rebates of up to $8625 as the country moves towards a goal of ‘‘net zero carbon emissions by 2050.’’

Ticket prices on utes will increase correspondingly depending on the vehicle’s options.

‘‘It’s a low blow against tradies and farming communities. They don’t have an alternative option for a ute,’’ managing director of Balclutha Motors Jared McPhee said.

Most car dealerships reported increased sales after the penalty was announced, some advertising ‘‘Last Chance’’ offers for utility vehicle drivers to upgrade or switch to a pick›up.

The purchase window was left open three months longer as the price hike was delayed from January to April due to Covid›19, but the pandemic also meant major supply issues for motor retailers.

Last year, 40,000 utes were sold in New Zealand but none had an electric option.

In February, Chinese motor corporation SAIC released its LDV EV T60 ute in New Zealand, but with no 4×4 option and reduced ground clearance, it is not intended for off›road use.

‘‘There are some smaller petrol options, but if we’re supposed to be moving away from fossil fuels, where are the EV utes?’’ a Balclutha contractor who asked not to be named, asked.

‘‘In the meantime, farmers are forking out so city people can sit on the motorway in electric cars,’’ he said