
The government of British Columbia has introduced a new program to incentivize the purchase and use of electric cars in B.C. The program allows vehicle manufacturers to apply for credits based on the number of electric cars they sell or lease in B.C. each year, which will then be applied against their provincial corporate income tax liability over five years, up to $5 million per manufacturer annually. Manufacturers who have already purchased credits may transfer them to other companies by completing an application form. The goal is to reduce emissions, create jobs, and support economic development in the province. British Columbia has added another incentive for consumers to switch from fossil-fuel vehicles to electric or hydrogen-powered vehicles. However, current supply concerns may make it challenging for customers to take advantage.
The provincial government of British Columbia has announced a new tax incentive for zero-emission vehicles, which the local automotive industry has welcomed. However, there are concerns that the current inventory of such vehicles is not yet sufficient to meet demand. The new tax incentive will allow qualifying zero-emission vehicles exempt from the provincial sales tax, set at 7%. The exemption will be in place for five years and applies to both new and used vehicles. Carole James, the Minister of Finance, made the announcement, stating that the incentive was created to aid the province’s objective of having zero-emission vehicles account for 10% of all new vehicle sales by 2025.
The local automotive industry has welcomed the new incentive, with representatives from both the dealership and manufacturing sectors praising the move. However, there are concerns that the current inventory of zero-emission vehicles is insufficient to meet demand, with most dealers only having a handful of such vehicles available for sale. It could challenge the province to meet its target of a 10% market share for zero-emission vehicles by 2025. However, the Minister of Finance said that the government is committed to working with the automotive industry to increase the availability of such vehicles. The new tax incentive is the latest in a series of measures introduced by the provincial government to support the growth of the zero-emission vehicle market. Other initiatives include establishing charging infrastructure and promoting electric vehicles through the “Drive Electric” campaign.
The Reason Behind Providing Incentives for Zero-Emission Vehicles Despite Low Inventory:
The province unveiled various additional tax measures on Tuesday to reach the targets of its Clean climate action plan, which calls for 26% of all new passenger vehicles sold in the province to be zero-emission vehicles (ZEVs) by 2026, increasing to 90% by 2030 and 100% by 2035. British Columbia was already one of the most enticing regions in Canada to buy electric vehicles, with a goal of E.V.s accounting for 90% of new car sales by 2030. And now, thanks to PST reductions announced in the province’s 2022 budget, it’s getting even more EV-friendly.

How Are Incentives Being Provided?
Residents in the western province who buy a pre-owned battery-electric vehicle will no longer have to pay the PST, which was previously set at 12% on vehicles sold up to $124,999, 15% on those sold between $125,000 and $149,999, and 20% on those sold beyond $150,000, starting on February 23, 2022. When bought “used,” which the government defines as having been driven over 6,000 kilometers, zero-emission vehicles will be exempt from PST.
However, if you’re looking for a gently used Model 3, don’t wait too long because the exemption has a best-before date. In five years, the exemption will end on February 22, 2027. The reforms include an exemption from paying provincial sales tax (PST) on used ZEVs, which went into effect on Wednesday, and an increase in the passenger car surtax threshold for ZEVs from $55,000 to $75,000.
In addition, provincial authorities are raising the passenger vehicle surtax threshold for zero-emission vehicles from $55,000 to $75,000, which will be in effect until February 2027. With the fleet of E.V.s that stampeded out of 2021 — including our top eight picks — now entering “used” territory, now may be the best time ever to consider switching away from gas.
Eligibility of a Vehicle for Tax Exemption and Incentives:
Vehicles must have driven at least 6,000 kilometers to be eligible for the PST exemption. Battery-electric, plug-in hybrid electric, and hydrogen fuel-cell vehicles are all examples of ZEVs.
The PST exemption on ZEVs will cost $21 million this year and $29 million next year, according to the province’s 2022 budget, but it will help boost sales from those who desire an electric vehicle but can’t afford one. “While most individuals want to do the right thing for the environment, it isn’t always the most inexpensive option,” Finance Minister Selina Robinson said at the budget presentation. However, according to Blair Qualey, president, and CEO of the New Car Dealers Association of B.C., getting a ZEV is a “difficult period.”

Recent Updates on the Province’s Tax Incentives Schemes:
- According to Daniel Breton, president and CEO of Electric Mobility Canada, the country’s national voice for electric vehicles, supply challenges created by the pandemic and other factors have reduced the availability of new vehicles — and, as a result, used vehicles.
- He is optimistic, however, that the new tax exemption in British Columbia would assist individuals in purchasing used ZEVs before it expires in February 2027.” I think the current shortage will go away eventually, and that will make it easier for folks who can’t afford or don’t want to pay for a new E.V.,” he said.
- For the past ten years, the province has granted refunds of up to $3,000 to purchase new ZEVs, while Ottawa offers a $5,000 rebate.
- Scrap-It, a non-profit organization in British Columbia, also gives refunds to customers who trade in their conventional automobiles for a new or old electric or plug-in hybrid vehicle.
- According to experts, B.C.’s ZEV mandate, which was enacted into law in May 2019, as well as purchase and installation rebates, has propelled the province to the forefront of ZEV ownership in Canada.
- “By putting that policy in place, we’ve already done the heavy lifting,” said Jonn Axsen, director of SFU’s Sustainable Transportation Action Research Team. “Things will move in the correct path as long as we have the ZEV mandate.”
- According to the New Car Dealers Association of B.C., ZEVs account for 12% of all new vehicles sold in the province, and ZEV registrations jumped 38.5 percent in the third quarter of 2021 compared to the same period in 2020, according to Statistics Canada.
- New registrations of gasoline-powered automobiles, on the other hand, fell 15.9%.

To conclude, the latest tax incentive for zero-emission vehicles in British Columbia has been welcomed by the automotive industry. Still, there are concerns that the current inventory is not yet sufficient to meet demand. The provincial government of B.C. has introduced a new program to incentivize electric car sales and reduce emissions, create jobs, and support economic development. Manufacturers may apply for credits based on the number of electric cars they sell or lease in B.C. each year which will then be applied against their provincial corporate income tax liability over five years up to $5 million per manufacturer annually. It could present challenges for meeting the goal of a 10% market share by 2025, but the government committed to working with the manufacturing sector to increase the availability of such vehicles.
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