Claim that FBT change is already causing job losses

A car fleet management company has claimed that the federal government’s proposed change to the Fringe Benefits Tax (FBT) has caused it to lay off a quarter of its workforce.

According to AAP,  Fleetcare says that 20 of its employees will lose their jobs this week because of the tightening of rules surrounding tax concessions on company vehicles.

 Fleetcare founder Nigel Malcolm said that the company had been devastated by the decision and that it had already had to cancel a number of orders.

He wants the decision to be overturned and said, “If the government had consulted the industry, we could have worked out a plan that delivered a more positive outcome for everyone.”

Under the changes which will apply from April 2014, any driver who receives a new employer-provided car or car bought through salary sacrifice will have to keep a log of their private use of it. Such use will be subject to the FBT. This will be paid by their employers.

The existing statutory formula will continue for existing contracts and cars, but no new ones will be allowed.

Opposition leader Tony Abbott has pledged that a future Coalition government would not implement the change. In addition, he raised doubts that the change will raise the $1.8 billion that the government has claimed.

 “It almost certainly won't collect the revenue that is claimed because of the damage it will do to economic activity,” he said after meeting industry representatives in Melbourne.

Several within automotive industry share this view.

Matt Honan, of salary packaging company Remunerato told the Australian, "Over four years, the impact on import duties, luxury car tax, stamp duties, registration and so on, we're looking at a negative impact of $2.2bn……so they'll be in a hole for $400m."

The Business Spectator points to the notion that the FBT concession is widely abused and claims that the change may actually help the local automotive manufacturing sector.

Currently, many companies lease expensive imported cars and others often do use company cars for domestic purposes.

The government is currently in negotiations with General Motors and Toyota in an attempt to formulate a strategy to save the local car manufacturing industry. The FBT is likely to be factored into that strategy and any damage caused by the change will be accounted for.

Industry Minister Kim Carr has already stated that any unintended negative impact on the industry would be addressed in the new car plan. And he pointed out that the shift to an ETS is expected to cut the costs of Australian-made cars by $40 a vehicle.