By Isabella Cota

SAN JOSE  Mon Jul 22, 2013

(Reuters) – Costa Rican President Laura Chinchilla signed a bill on Monday to slash taxes on hybrid cars by 20 percentage points, in a bid to cut fuel emissions in the Central American nation.

The 2006 tax will be cut to 10 percent, well below the 30 to 53 percent tax rates levied on vehicles fueled exclusively by gasoline and diesel but still higher than the zero-tax status enjoyed by electric vehicles.

“In this bill we’ve incorporated incentives that should be seen as signs that Costa Rica wants to keep moving forward in its determination of achieving its carbon neutrality goal”, Chinchilla told reporters.

The tax break applies to sedan models, motorcycles and some pick up trucks that run on both gasoline and electricity.

The only hybrid model sold in the Central American country is the Toyota Prius, but Nissan is looking to start selling its Leaf model soon, according to a spokeswoman for Costa Rica’s Environment Ministry.

Costa Rica has set the goal of becoming carbon neutral by 2021, which means that any industrial emissions will be offset through different mechanisms, like taxation, reforesting to soak up greenhouse gases, and using clean energy. (Writing by Alexandra Alper; Editing by Michael Perry)