Following on from my article yesterday criticising Tony Abbott’s vow to dump the Government’s announced changes to fringe benefits tax (FBT), Michael Pascoe has penned a fantastic piece slamming the media’s hysteria over the FBT changes and the Opposition leader’s lack of policy backbone. From Business Day:
No one likes to lose a lurk and those making a nice living out of that lurk understandably hate to lose it even more, but the fact remains that the car fringe benefit tax and novated lease business has been just that: a lurk whose days were always numbered…
It’s a farcical situation when vehicles driven for purely private purposes are given the same sorts of tax deduction and GST privileges as vehicles used for business, yet most of the coverage of the FBT reform seems to have been devoted to the squealing of the those feeding off a policy that randomly advantaged a few and disadvantaged most Australians…
What’s being missed is that everyone who doesn’t have a novated lease to buy a new car is effectively subsidising the minority who do… [And] it’s a subsidy worth about $3000 a year…
Avoiding GST is a key part of the appeal of a novated lease. As a slight simplification, the novated lease system allowed an employee to have all the GST involved in buying and running a car to be offset by the employer’s total GST collection obligation – meaning the ATO missed out on revenue…
The Liberal Party promising to retain the car lurk is particularly hypocritical when it’s also promising a white paper review of the tax system that will include consideration of broadening and/or increasing GST…
Three things are required for real tax reform: genuine political leadership, a responsible opposition and, particularly when the first two are missing, a crisis. We’re very short on the first two… [But] it was the crisis of needing to fund the carbon tax change that has produced this promised end to the novated lease rort.
Beautifully put. As I noted yesterday, it is worrying that Australia’s alternative prime minister has blanketly denounced changes that would save the budget significant expense and restore greater equity to the tax system.
