Budget Speech

Easing Traffic Congestion

164.      Private cars account for over 60 per cent of the vehicle fleet in Hong Kong. The number of vehicles in Hong Kong has grown continuously over the years. The year-on-year increase of private cars in 2010 hit 5.4 per cent, a record high of more than a decade. The number of private cars first registered in 2010 surged to more than 41 000.

165.      It is obvious that the continuous growth in the number of private cars has adversely affected the traffic conditions on our roads. Despite all the road improvement works to ease traffic congestion, average vehicle speeds on all strategic roads across the territory decreased by over five per cent in 2010. Allowing the situation to deteriorate would make our roads even more congested. We must take decisive measures to curb the growth of private cars.

166.      I propose to increase the rate of each tax band for the First Registration Tax for private cars by about 15 per cent. Details of the adjustments are set out in the supplement to the printed version of this Speech. The First Registration Tax for other types of vehicles and the existing concession for electric vehicles and environment-friendly petrol private cars will remain unchanged. The above adjustments will be gazetted and take immediate effect today. The proposed measure is intended to relieve traffic congestion instead of raising tax revenue.

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