Car industry builds tax fight war chest

AUSTRALIA’S car industry is building a war chest of funds it will use to fight last week’s proposed change to fringe benefits tax laws that it fears will strip up to 100,000 sales from the market.

Australian Automobile Dealers Association (AADA) chief executive Richard Dudley said several other industry bodies were collaborating on building a pool of money to apply pressure to the federal government to reverse its decision to change tax laws affecting cars.

The government said last week it planned to remove the 20 per cent statutory formula for working out the amount of fringe benefits tax people who either lease or salary-sacrifice cars must pay.

The removal of the formula, which assumed a vehicle was used only 20 per cent of the time for private mileage, will raise about $1.8 billion for the government and help pay for an early move to a floating carbon price.

“We are in discussions with other parts of the industry that are talking about a fighting fund. We’re not alone in this,” Mr Dudley said yesterday after coming out of a meeting between federal opposition leader Tony Abbott and about 30 car industry representatives.

“This morning was one of the few occasions I can recall where the motoring organisations ... are all in the same room and in violent agreement with one another about the impact and the way it has come about.

“I think unfortunately it’s very rare, and I’m not even sure about the headier days of the car industry in the past, has there been this sort of quick, galvanising response.”

Mr Dudley said the AADA and its fighting fund partners were still working out the level of funding, which will be used to influence voters and politicians that the FBT changes were not going to help an already struggling industry.

“Some of the information we were shown this morning made it quite clear it's going to impact a hell of a lot more people that the federal government has laid claim to,” he said.

“The notion that it’s high-priced vehicles and high income earners has been put to bed – the average price of a packaged car is $34,500 – and 35 per cent of those roughly are Toyotas, Fords and Holdens manufactured in this country, and over 70 per cent of the drivers with salary package arrangements earn less than $100,000.”

Mr Dudley said the AADA would continue to monitor the situation, and survey its members to see exactly what effect the tax change was having.

“We’re asking them to give us feedback on fundamental questions give us some indication of the nature of the impact, how many lost sales, whether there is a likelihood that they may have to reduce staff, what other actions are they taking to ameliorate the impact, and to get a feeling for that.”

The questions have already gone out to Victorian dealers, with the AADA expanding the project nationally this week.