Changes to the way vehicles are taxed in Australia could have wide reaching repercussions on new car sales, and especially those of locally made models, an industry group has warned.
Reforms suggested by the federal government in response to changes to the carbon tax announced earlier this week could affect up to a third of the new car market, or about 363,000 vehicles, the Federal Chamber of Automotive Industries (FCAI) told industry publication GoAutoNews.
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The report said FCAI chief executive Tony Weber had warned the removal of fringe benefits tax incentives would cut deeply into the 1.1m new vehicle sales in Australia.
And Toyota Australia – which manufactures the Camry locally – has said the revision had the potential to devastate its business in Australia if the government went ahead.
The proposal reportedly has also hit a local, publicly listed company which develops salary packages that specialise in cars, forced to call for a trading halt after the value of its shares plummeted almost 15%.
GoAuto said the industry warnings came after prime minister Kevin Rudd confirmed his government would remove the A$25 a tonne carbon tax introduced last year by his predecessor, Julia Gillard, and replace it with an emissions trading scheme that would reduce the cost to about $6 a tonne from July next year.
Winding back the carbon tax has left a $3.8bn shortfall in the federal budget with the treasurer saying it could fill in $1.8bn of that shortfall by abolishing an automatic 20% fringe benefits tax entitlement for cars.
Toyota Australia media and external affairs manager Beck Angel told GoAuto the automaker would have to study the broader impact to its business.
“Our initial assessment is the proposed change has the potential to have a major impact on the new car market in Australia,” Angel said.
“As market leader, this would significantly affect Toyota and in particular our locally built vehicles which are heavily reliant on sales to business and government fleets.
“We strongly support the FCAI’s call to government to reconsider this policy.”
FCAI’s Weber told GoAuto Australia’s car-making industry needed long term planning.
He said the change would flow right through the industry, including to dealerships and service centres.
“I want to know if the government truly understands the consequences of this decision, and why the industry was not consulted on such a significant change,” he said.
“The FCAI is yet to do precise calculations but we estimate… this could impact on around a third of new car sales.”
