The Canadian government's new proposed budget includes both a $2,000 incentive for buying fuel efficient vehicles like hybrids and a $4,000 tax for purchasing less efficient models like SUVs. Unfortunately, the Detroit News article doesn't specify how the budget determines what vehicles qualify for the fuel efficiency rebate and which get dinged with the heavy tax.

What affect the Canadian government's new budget will have on car buying habits in the country is unclear, as Canadians don't buy many SUVs to begin with – only around 15,000 in 2006. At the same time, the environmentally-inspired incentive/tax combo may serve to irritate the very automakers that are deciding which plants they can afford to idle or shut down completely, many of which are located in Ontario.

The plan also has plenty of loopholes that can be used to get around the tax. For instance, it doesn't apply to used vehicles, so Canadians can freely buy year-old HUMMERs for significantly less than a new one. There's always the option of driving south to purchase a car in the States, as well, though we're not clear what mess of paperwork that would create to own and operate it back in Canada.

You can read all the details about Canada's new budget and how it affects the auto industry here.

[Source: The Detroit News]