General

Electric vehicle fringe benefits ‘just not a good policy,’ says Coalition’s Jane Hume

Electric vehicle fringe benefits 'just not a good policy,' says Coalition's Jane Hume

“What these incentives do is reduce emissions and that’s where a value comes from, reducing pollution and reducing our reliance on petrol and diesel,” he said.

Labor does not need the support of the coalition to pass laws in the upper house, but would have to turn to the Greens and independents to get 13 votes from the crossbench to legislate the tax breaks.

Prime Minister Anthony Albanese promised the stimulus in the Labor election platform, but coalition MPs on Tuesday argued that the full costs were not revealed until after the election when the parliamentary budget office calculated the impact over a decade.

The policy would exempt eligible vehicles from import tariffs, lowering the retail price for all buyers, and would also exempt them from benefits tax, making them cheaper for employers when included in employee salary packages.

To be eligible, the vehicle must cost less than the Luxury Car Tax threshold, which is currently $71,849 for most cars but is $84,916 for fuel-efficient and zero-emission vehicles.

This would rule out high-end electric cars, although the Tesla Model 3 has a base price of $63,900.

The Senate investigation asked Treasury officials about the likely impact on carbon emissions, but was told the government did not model the potential reduction. There was no estimate of the cost of the incentive for each electric vehicle purchased. The bill provides for a revision after the first three years of the policy.

Labor unveiled the plan on May 1, with estimates from the Electric Vehicle Council that a $50,000 model like the Nissan Leaf would be at least $2,000 cheaper due to the tariff elimination.

Labor also estimated that the benefit tax exemption would save employers up to $9,000 a year in vehicle costs and benefit staff as well.

Australians bought 95,256 new passenger cars, SUVs and commercial vehicles in August, up 17.3 percent from the same month last year, thanks in part to record arrivals of Tesla vehicles from the company’s China plant.

Tesla is now one of Australia’s best-selling cars, ranking fourth in volume after the Toyota HiLux, Ford Ranger and Toyota RAV4 the Federal Chamber of Automotive Industries.

Loading

The Parliamentary Budget Office analyzed the policy and found that it would cost $45.9 million in its first year, but that cost would double by 2025 and double again by 2027.

It said it would cost $4.5 billion in foregone tax revenues by the decade through 2033.