Fiji's tax credits for the importation of hybrid cars: The unintended consequences of environmental policies

Given the international movement on climate protection following the United Nations Framework Convention on Climate Change (UNFCCC) whose goal is reducing worldwide carbon emissions, many governments now offer a diverse range of financial incentives to consumers to elevate the sale of electric vehicles. In most countries, these include hybrid vehicles capable of driving solely on electric power. Since 2014, the Fiji Government has implemented tax incentives for the importation of ‘environmentally friendly vehicles’. The tax incentives provide concessions on excise duties and value-added tax for importers and buyers of electric cars, hybrid cars, gas-operated cars (LPG and CNG) and solar-powered vehicles not older than 8 years (Fiji Budget Address 2013, 2014, 2015).

As a result of the new tax incentives, new car registrations in Fiji have significantly increased since 2014 and almost doubled between 2013 and 2018. The total numbers of cars registered rose from 89,000 in 2013 to almost 120,000 in 2018, an increase of 35 per cent; in 2013, about 7,600 cars were newly registered. In 2014, this number rose to 10,800 and to more than 14,300 in 2018.