The Hong Kong Special Administrative Region (HKSAR) government will introduce "green" taxes and give tax reduction to encourage pro-environment behavior, said the financial secretary on Wednesday.

"We need to impose 'green' taxes in accordance with the Polluter Pays principle," said Financial Secretary Henry Tang when presenting the 2006-2007 government budget to the Legislative Council (LegCo) on Wednesday.

Based on the principle, the secretary of the environment, transport and works will introduce a bill to the LegCo later in the year to provide a legal framework for producer responsibility schemes. The products to be regulated under the schemes will include tyres and plastic bags, said Tang.

The Environment, Transport and Works Bureau will levy a fee on tyres and require the industry to be responsible for their recovery and recycling. Regulation on the plastic bags is also being brewed, with the HKSAR authorities intending to introduce legislation prohibiting their free distribution and to levy a tax to deter their use.

The authorities will consult the industry and the public extensively on the relevant legislative proposals, while negotiating with major supermarket and chains on a plastic bag reduction target, said Tang. Meanwhile, the HKSAR government will also introduce tax reduction measures to encourage pro-environment behavior.

"I propose to exempt electric vehicles from first registration tax for further three years up to 31 March 2009," said Tang. He also mentioned that the HKSAR government will consider the option for hybrid vehicles that produce fewer emissions than petrol-only vehicles, depending on the availability of the type of automobiles.