Shadow treasurer Joe Hockey has likened the federal government's surprise changes to fringe benefit tax (FBT) on cars to taking a baseball bat to the motor vehicle industry.
Labor has changed FBT arrangements on car leasing and salary sacrifice packaging to raise $1.8 billion to help support a move to an emissions trading scheme a year earlier than expected.
Mr Hockey met on Wednesday with automobile industry representatives, car dealers and salary packaging experts in western Sydney to discuss the ramifications of Prime Minister Kevin Rudd's decision.
"This is going to be like a baseball bat to the motor vehicle industry in Australia," Mr Hockey told reporters at a car dealership.
"This is poorly thought out, there was no consultation with any stakeholders."
The change, which does away with the 20 per cent statutory rate - regardless of kilometres travelled - and requires people to log private use of a business car, is expected to impact 325,000 people.
Mr Hockey said 75 per cent of recipients earn less than $100,000 a year.
"They are going to be hit with a tax bill of $1400 a year, every year going forward," he said.
Deputy Prime Minister Anthony Albanese said a lot of people were "fiddling the system".
"Those people who are salary sacrificing (and) who use their car less than 20 per cent but claim the 20 per cent offset ... the chances are it's not a Holden Commodore, it's a BMW," he told Sky News.
The 20 per cent statutory rate was recommended by the Henry tax review and implemented in 2011.
Leasing and salary packing arrangements produce big sales for the motor industry.
But asked if he would support Labor's change, Mr Hockey said: "I have deep, deep reservations, but certainly we would not start from yesterday. This is not the way to run tax policy".
The National Tax and Accountants' Association said the FBT changes have "catastrophic consequences" for the car industry and urged Mr Rudd to rethink it.
Treasurer Chris Bowen said the government hadn't abolished an FBT concession for motor vehicles.
"If you are using your motor vehicle for business use, you deserve the reduction, you'll get the reduction, you'll keep the reduction," he told reporters in Sydney.
"If you are not using your car for business, then you don't need a business-use deduction."
He clarified that people who claim business usage will need to justify their claim, either by filling in a log book or using a mobile phone app to track their percentage of business use over three months every five years.
"If you are going to return to surplus, if you are going to have responsible measures in place, that means sometimes making tough decisions," he said.
He noted Mr Hockey did not rule out voting for this proposition.
He also corrected Mr Hockey on his figures, saying Treasury advice indicates two-thirds of people who salary sacrifice cars earn more than $100,000.
In any case, he said this was a test for the opposition.
"Is Mr Hockey ... really saying that their policy position is, if you have a car and do not use it for business use you should be able to claim business use?" Mr Bowen asked.
Share
