If Labor is serious about electric vehicles, fixing the benefits tax is the next step

On Friday, Energy Minister Chris Bowen came a little closer to Australia taking electric vehicles seriously, but Labor is not there yet.

If it was serious, it would bring down the government’s annual billion dollars subsidy for fossil fuel cars through novated rental rate.

Since the Abbott/Hockey opposition took the salary package
industry money (a $250,000 donation to the Liberal Party in 2013
election campaign) and the opposition Shorten was subsequently overthrown
Further, I have used the political parties’ continued unfairness and wastefulness of novated leases as a test of their fiscal integrity.

Both sides continue to fail.

The wage package industry as a whole is a dubious proposition – that means some people manage to exploit tax minimization tricks that others are private. This is not a sound basis for a fair and reasonable tax system.

And it’s very costly for the Commonwealth. Just “structure” the bangs
tax benefits (FBT) and GST of car leasing for a minority of employees is costs the rest of us about a billion dollars a year.

To deliver on its promise to cut carbon emissions, the government needs Australia catch up with other advanced countries in electric vehicle penetration.

A first step was to remove the employee benefit tax (FBT) on electric vehicles provided by the employer. Checked. It helps a bit, but given that electric vehicles are currently much more expensive, not much.

Although there are FBT exemptions available for coal burners (including the ubiquitous utility ones which are Australia’s top selling models), there is no comparative advantage.

The second step will be to meet the standards of advanced countries for the average
vehicle emissions, as reported by Climate Change and Energy
Minister on Friday. Note that Chris Bowen has only promised a “discussion paper” at this point – and real reform will have to fight off a powerful and well-connected lobby before it materializes.

A step waiting to be taken

It’s another step, but pursuing tax breaks for fossil-fuel vehicles means
government policy works against itself. Abandoning all tax breaks, stashes and benefits for carbon burners is the obvious third step the government has failed to signal, let alone take.

But to be really serious, there is the fourth step: using the tax system to
apply both carrots and stick – benefits for zero emission vehicles,
penalties for fossil fuel users.

This is the subject of an ongoing Senate committee investigation into a
parliamentary bill which “will amend tax legislation to encourage greater
adoption of electric cars by Australian road users by manufacturing electric cars
more affordable and reduce Australia’s carbon emissions
transport sector. »

There are a lot of slippages between the recommendations of the Senate committee and
legislation. The nature of the Greens/Pocock balance of power in the
Senate plus Greens/Teals moral suasion and potential threat in the
The House of Representatives could still counter the lobby for the status quo.

Diane Kraal, professor of business law and taxation at Monash University, is
is scheduled to appear before the committee on Thursday to flesh out a
submission of a Monash-Griffith University joint research project on
boost the fleet of electric vehicles.

Zero emissions or nothing

The 11 recommendations would end all tax breaks for fossil fuel burners, including hybrids – it’s zero emissions or nothing for a tax subsidy.

The cost to the budget of tax breaks for electric vehicles would be covered by
remove them for fossil fuel vehicles and apply FBT to a slip
emissions-based penalty scale – the more carbon burned, the more
the FBT rate.

The Monash-Griffith project targeted fleet managers as a pathway to
get more electric vehicles on the road as more than 40% of new light
vehicle sales are for businesses. These are vehicles that then tend to transfer to the private second-hand market after a few years, encouraging wider adoption.

Having an FBT break for EVs to operate would calm the wage package
industry, which nevertheless remains fundamentally unfair.

The 2013 labor policy of removing novated leases would have diminished
said industry. With such a low unemployment rate, now is the time to
shift to principle-based politics rather than political giveaways and
threats.

Opportunity knocks in this political cycle – if there are any who have the
ticker to the government to respond.