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FBT overhaul on company cars a vote-changer | comment

The new FBT rules threaten to cripple the very industry successive Federal Governments have spent money to protect.

It impacts at least a third of all new cars on the road, threatens to cripple the already struggling manufacturing industry and will eventually lead to thousands of job losses across the automotive retail sector because of an anticipated drop in sales.

In the Rudd Government's attempt to fill a $1.8 billion black hole the motorist has once again been plundered. Treasurer Chris Bowen says “the world has moved on from when this system was introduced in 1986”. But the changes -- made literally overnight, without consultation -- are so flawed it is difficult to know where to start.

Firstly, it will add enormously to the administration of companies big and small, and every person who drives a company car. Rather than assume 20 per cent of a vehicle's use is personal -- and charge FBT on that amount, as was the case -- the Rudd Government is taking a gamble that this figure is too low. Why not simply increase it to, say, 25 per cent across the board and save everyone the paperwork?

If the motorist is going to get slugged yet again, the least the government could do is make it easy. Can you imagine the feeling towards the government every time someone fills out their logbook? The suggestion that the work of a logbook can be solved by an iPhone app simply highlights the government's ignorance of the issue.

The net result is that companies and their employees will end up paying more for company cars -- which will likely see a shift in the types of cars they buy. Fleet experts are already predicting the government will probably collect less FBT because people will switch to older, cheaper, and privately purchased cars. And be prepared for a glut of ex-fleet cars flooding the used car market as people trade their way out of the FBT nightmare. This is tipped to drive down the value of every car on the road.

Perhaps the ultimate flaw, however, is that new FBT rules could suffocate the very industry successive Federal Governments have spent $5.4 billion over the past 10 years trying to protect. Fleet sales account for up to 80 per cent of all locally-made cars. These changes will cruel their business models.

For conservative Toyota to come out swinging shows you just how serious a gaffe the Rudd Government has made. The only reason we’ve not heard from outspoken Holden boss Mike Devereux yet is because he is overseas on a work assignment. And Holden is in the middle of sensitive negotiations.

But I have a pretty good idea what Holden’s reaction is going to be once it fully assesses this mess. And I reckon you'll be able to hear Devereux's sighs of disbelief from here.

This reporter is on Twitter: @JoshuaDowling