Tony Abbott has today come out swinging against the Government’s announced changes to fringe benefits tax (FBT). From the AFR:
Mr Abbott said the policy had already hit car industry jobs…
“The only way to stop this is to change the government,” Mr Abbott said in Melbourne…
The Coalition has pledged to dump Labor’s proposal if it wins the election, but it came under fire for plans to cut car industry assistance by $500 million. On Monday, Mr Abbott and shadow treasurer Joe Hockey will meet with tax advisers to talk through the measure…
The change will cost the typical person with a packaged car $3000 a year.
Industry Minister, Kim Carr, on the other hand, has defended the changes, arguing the system as it currently exists is inequitable:
“The FBT changes are good ones,” Senator Carr said. “The FBT changes bring fairness to the taxation system – I ask a simple question – why should the Australian public fund the private use of motor cars, why should we be, as a community, funding the use of a BMW for the private use.”
Too right. Indeed, one of the few rational articles on the FBT changes has come from Climate Spectator’s Tristan Edis, who argues that the current FBT rules have created a rent seeker’s paradise and sporn an entire industry set about rorting the rules – resources that could be put to better use elsewhere in the economy:
What has the government done? It has removed the ability for people to use the leasing of a car as an income tax deduction (and also avoiding GST on petrol) by default (known as the ‘statutory method’), without providing any evidence that the car is used for work purposes. Instead people will have to provide evidence via a log book that demonstrates that the car is a genuine working expense.
Outrageous isn’t it?..
Leasing and salary packaging companies [have] sprung up to exploit the loop hole, as [have] fuel card companies…
And of course there were thousands of people needlessly employed to administer the tax loophole. These people could have been doing something more productive with their time…Yes some people will lose jobs in salary packaging and leasing finance companies and in car dealerships. No doubt many of them are lovely people whose employment we should be concerned about. But the economy will be undoubtedly better off with these people employed in other careers providing services that people would prefer to a new leased car.
What about the Australian car manufacturing industry I hear you say. If you think they need more subsidies, then wouldn’t you want taxpayers’ money targeted at these locally made cars rather than dispersed across BMWs, Mercedes and Hondas as well?
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.
