Car industry slams 'dire' tax changes

Another nail has been hammered into the coffin of the Australian motoring industry - and it’s the Federal Government swinging the hammer.

At least that’s the claim of the embattled car industry, which has this morning attacked the Government’s proposed changes to the Fringe Benefits Tax for cars, a move it says will see sales of locally-built cars plummet.

The changes, which affect employer-provided or salary-sacrificed cars, are being introduced to fund a $3.8 billion dollar hole in the federal budget, left by Kevin Rudd’s decision to ‘terminate’ the carbon tax.

The Government wants to move from a fixed carbon price of $24.15 a tonne, to a floating price of around $6 by July 2014 – a year earlier than planned.

The new laws are expected to affect more than 320,000 car owners that use salary-sacrificed or company cars, with the auto industry united in its condemnation of the new laws.

According to the Bracks Review of 2008, over 50 percent of Australia’s new cars are bought under the car benefits tax regime and at least 75 percent of locally-built cars go to the government or business sector.

The VACC (Victoria’s peak automotive body), the Australian Motor Industry Federation, the national body for the repair, service and retail sector and the Federal Chamber of Automotive Industries (FCIA) have all slammed the move, with Holden calling for the changes to be reconsidered.

“Holden is still assessing the Government's policy changes but initial reviews suggest a potentially significant impact on the new car market, particularly on locally manufactured vehicles,” said an official statement. “Holden fully supports the FCAI's call to the Government to reconsider this policy.”