- Helping you drive happy

The 2007 Budget: Incentives for car drivers

Now we're talking!

Jim Flaherty, the Conservative government's Finance Minister, tabled his latest budget yesterday, March 19. Beyond measures to restore fiscal balance in Canada and to reduce taxes for working families, a series of incentives were announced that could have a significant influence on the kind of vehicles Canadians will buy from now on. Indeed, the Harper administration has come up with two specific solutions: a tax on high-polluting, large-displacement vehicles and rebates on fuel-efficient vehicles through the ecoAuto program.

A tax on large-displacement vehicles
Details about how this tax will be implemented are not yet known. However, we do know that it could make the government $220 million richer over the next two years. Automakers will first have to assume the costs, which could spring from a base $1,000 amount to no less than $4,000 in the case of fuel-inefficient V8-powered vehicles such as the Jeep Grand Cherokee, Ford Explorer, Ford Expedition, Chevrolet Suburban, Hummer H2/H3 and Toyota Sequoia. Unfortunately, automakers will most likely react by increasing the base price of said models, therefore making consumers pay even more for this green tax. The bottom line is: if you don't want to shell out extra cash, choose a smaller, less thirsty vehicle.

Rebates on fuel-efficient vehicles
In order to encourage Canadians to buy smaller, more fuel-efficient vehicles and to allow them to help reduce greenhouse gas emissions, the federal government launched the ecoAuto program, an integral part of Transport Canada's ecoTransport strategy. What this means is that people who purchase or lease a highly fuel-efficient vehicle after March 20, 2007, will get a rebate of up to $2,000. This incentive will cost the government $160 million over the next two years. Let's remind you that the Quebec government has recently increased from $1,000 to $2,000 the maximum PST amount that can be refunded on any sale or long-term lease of a new hybrid vehicle between February 20, 2007, and January 1, 2009. In some cases, the total rebate can reach $4,000. Now that's interesting!

List of eligible vehicles
Obviously, the government will revise the list every time an automaker will launch a new hybrid or highly fuel-efficient vehicle, or when they improve the fuel economy of their current vehicles to meet the required standards. For the moment, the following vehicles are eligible:

$2,000 rebate
  • Honda Civic Hybrid
  • Toyota Prius
  • Ford Escape Hybrid with CVT
  • Ford Escape HEV with CVT
$1,500 rebate
  • Toyota Camry Hybrid
  • Nissan Altima Hybrid with CVT
  • Ford Escape HEV 4WD with CVT
$1,000 rebate
  • MINI Cooper with 6-speed manual transmission
  • Toyota Yaris 
  • Toyota Corolla with 5-speed manual transmission
  • Saturn Aura Green Line with 4-speed automatic transmission
  • Jeep Compass with 5-speed transmission or CVT
  • Jeep Patriot with 5-speed manual transmission or CVT
  • Lexus RX 400h with CVT
  • Toyota Highlander Hybrid with CVT
$1,000 rebate (Flex-fuel vehicles)
  • Chevrolet Impala FFV with 3.5L engine and 4-speed automatic transmission
  • Chevrolet Monte Carlo with 3.5L engine and 4-speed automatic transmission
  • Chrysler Sebring FFV with 2.7L engine and 4-speed automatic transmission (with or without manual mode)

photo:Department of Finance Canada