Latest news with #LuxuryCarTax
The Advertiser
23-05-2025
- Automotive
- The Advertiser
Australia's Luxury Car Tax could be removed gradually
The Australian Government is reportedly considering a gradual phase-out out the Luxury Car Tax (LCT) to minimise the impact on vehicle resale values, rather than axing it in one fell swoop. The Australian reports the Albanese government is assessing a progressive lowering of the controversial tax after car dealers and automakers warned its sudden removal could spark a rapid collapse in vehicle resale values. The removal of the LCT has been put on the table as the government negotiates with the European Union on establishing a free-trade agreement (FTA). However, the government reportedly won't scrap the LCT unless it can secure a better deal on agricultural exports to the EU. This had been a sticking point when previous Australia-EU negotiations on an FTA collapsed in 2023. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Axing the LCT will satisfy the EU, which has been pushing for it to be abolished for at least five years. It also comes as European brands have been confronted by tariffs in the lucrative US market imposed by President Donald Trump. The Australian reports around 40 per cent ($480 million) of the total $1.2 billion annual LCT revenue is raised from European vehicle sales. With the LCT removed, the Australian Government will likely need to find a replacement source of revenue, and that could come from a road user charge. The government has had to contend with a decline in fuel excise revenue as buyers move to more fuel-efficient vehicles, as well as electric vehicles (EVs). A road user charge could see vehicle owners pay an amount based on the distance they travel, with the revenue in turn being invested in road maintenance and infrastructure. The LCT adds 33 per cent to any part of a vehicle's price above the LCT threshold. This is currently $91,387 for fuel-efficient (ie: vehicles with fuel consumption of under 7.0L/100km) and electric vehicles (EVs), and $80,567 for all other vehicles. Thresholds are set annually by the government and are indexed to the Consumer Price Index (CPI). From July 1, the definition of a fuel-efficient vehicle is changing to one with fuel consumption of under 3.5L/100km following the passing of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025. This change to the tax was implemented to drive uptake of more environmentally friendly models. Vehicles from Europe are also impacted by a five per cent import tariff, due to the absence of an FTA between Australia and the EU. But the proposed abolition of the LCT has been met with criticism from at least one of Labor's opponents, on the basis the government would be removing a tax from more expensive vehicles while also getting ready to impose penalties on brands that sell more popular, higher-emitting vehicles such as utes and SUVs as part of its New Vehicle Efficiency Standard (NVES). "I think it's a bit strange for the first act of a government to be giving a massive free kick to people who can afford very expensive European cars," Nationals Senator Matt Canavan told Sky News. "Why would we be making very expensive European cars cheaper while we make the average standard vehicles that Australians are struggling to afford more expensive?" In contrast, the Australian Automotive Dealer Association (AADA), the peak body for car dealers in Australia, has been among the voices domestically calling for the LCT to be scrapped, or at least significantly modified as part of a "wider root and branch review of Australia's automotive taxation regime". Calling it a "relic of an era when Australia manufactured vehicles" in its pre-budget submission this year, the AADA called for its "complete abolition". "The LCT was originally introduced as a means of protecting Australia's local vehicle manufacturing industry. With local manufacturing coming to an end in 2017, it just imposes unnecessary additional taxes on many vehicles, particularly more expensive lower emitting and EVs," the body said. The AADA argues it disincentives customers from buying new, safer and more environmentally friendly vehicles, and also penalises buyers – particularly those in regional areas – who require large SUVs and vehicle accessories that are aimed to improve safety. Vehicles from a range of mainstream auto brands, such as the Toyota LandCruiser, generate a significant proportion of LCT revenue raised, for example. "If the total abolition of the LCT cannot be achieved in a timely manner," the AADA argues, "then we propose reforms to the LCT, such as raising the threshold to target truly luxury vehicles and stage a sunset period for LCT, exempt low-emission vehicles and exclude accessories from the calculation of whether a vehicle hits the threshold forpaying the LCT." Content originally sourced from: The Australian Government is reportedly considering a gradual phase-out out the Luxury Car Tax (LCT) to minimise the impact on vehicle resale values, rather than axing it in one fell swoop. The Australian reports the Albanese government is assessing a progressive lowering of the controversial tax after car dealers and automakers warned its sudden removal could spark a rapid collapse in vehicle resale values. The removal of the LCT has been put on the table as the government negotiates with the European Union on establishing a free-trade agreement (FTA). However, the government reportedly won't scrap the LCT unless it can secure a better deal on agricultural exports to the EU. This had been a sticking point when previous Australia-EU negotiations on an FTA collapsed in 2023. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Axing the LCT will satisfy the EU, which has been pushing for it to be abolished for at least five years. It also comes as European brands have been confronted by tariffs in the lucrative US market imposed by President Donald Trump. The Australian reports around 40 per cent ($480 million) of the total $1.2 billion annual LCT revenue is raised from European vehicle sales. With the LCT removed, the Australian Government will likely need to find a replacement source of revenue, and that could come from a road user charge. The government has had to contend with a decline in fuel excise revenue as buyers move to more fuel-efficient vehicles, as well as electric vehicles (EVs). A road user charge could see vehicle owners pay an amount based on the distance they travel, with the revenue in turn being invested in road maintenance and infrastructure. The LCT adds 33 per cent to any part of a vehicle's price above the LCT threshold. This is currently $91,387 for fuel-efficient (ie: vehicles with fuel consumption of under 7.0L/100km) and electric vehicles (EVs), and $80,567 for all other vehicles. Thresholds are set annually by the government and are indexed to the Consumer Price Index (CPI). From July 1, the definition of a fuel-efficient vehicle is changing to one with fuel consumption of under 3.5L/100km following the passing of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025. This change to the tax was implemented to drive uptake of more environmentally friendly models. Vehicles from Europe are also impacted by a five per cent import tariff, due to the absence of an FTA between Australia and the EU. But the proposed abolition of the LCT has been met with criticism from at least one of Labor's opponents, on the basis the government would be removing a tax from more expensive vehicles while also getting ready to impose penalties on brands that sell more popular, higher-emitting vehicles such as utes and SUVs as part of its New Vehicle Efficiency Standard (NVES). "I think it's a bit strange for the first act of a government to be giving a massive free kick to people who can afford very expensive European cars," Nationals Senator Matt Canavan told Sky News. "Why would we be making very expensive European cars cheaper while we make the average standard vehicles that Australians are struggling to afford more expensive?" In contrast, the Australian Automotive Dealer Association (AADA), the peak body for car dealers in Australia, has been among the voices domestically calling for the LCT to be scrapped, or at least significantly modified as part of a "wider root and branch review of Australia's automotive taxation regime". Calling it a "relic of an era when Australia manufactured vehicles" in its pre-budget submission this year, the AADA called for its "complete abolition". "The LCT was originally introduced as a means of protecting Australia's local vehicle manufacturing industry. With local manufacturing coming to an end in 2017, it just imposes unnecessary additional taxes on many vehicles, particularly more expensive lower emitting and EVs," the body said. The AADA argues it disincentives customers from buying new, safer and more environmentally friendly vehicles, and also penalises buyers – particularly those in regional areas – who require large SUVs and vehicle accessories that are aimed to improve safety. Vehicles from a range of mainstream auto brands, such as the Toyota LandCruiser, generate a significant proportion of LCT revenue raised, for example. "If the total abolition of the LCT cannot be achieved in a timely manner," the AADA argues, "then we propose reforms to the LCT, such as raising the threshold to target truly luxury vehicles and stage a sunset period for LCT, exempt low-emission vehicles and exclude accessories from the calculation of whether a vehicle hits the threshold forpaying the LCT." Content originally sourced from: The Australian Government is reportedly considering a gradual phase-out out the Luxury Car Tax (LCT) to minimise the impact on vehicle resale values, rather than axing it in one fell swoop. The Australian reports the Albanese government is assessing a progressive lowering of the controversial tax after car dealers and automakers warned its sudden removal could spark a rapid collapse in vehicle resale values. The removal of the LCT has been put on the table as the government negotiates with the European Union on establishing a free-trade agreement (FTA). However, the government reportedly won't scrap the LCT unless it can secure a better deal on agricultural exports to the EU. This had been a sticking point when previous Australia-EU negotiations on an FTA collapsed in 2023. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Axing the LCT will satisfy the EU, which has been pushing for it to be abolished for at least five years. It also comes as European brands have been confronted by tariffs in the lucrative US market imposed by President Donald Trump. The Australian reports around 40 per cent ($480 million) of the total $1.2 billion annual LCT revenue is raised from European vehicle sales. With the LCT removed, the Australian Government will likely need to find a replacement source of revenue, and that could come from a road user charge. The government has had to contend with a decline in fuel excise revenue as buyers move to more fuel-efficient vehicles, as well as electric vehicles (EVs). A road user charge could see vehicle owners pay an amount based on the distance they travel, with the revenue in turn being invested in road maintenance and infrastructure. The LCT adds 33 per cent to any part of a vehicle's price above the LCT threshold. This is currently $91,387 for fuel-efficient (ie: vehicles with fuel consumption of under 7.0L/100km) and electric vehicles (EVs), and $80,567 for all other vehicles. Thresholds are set annually by the government and are indexed to the Consumer Price Index (CPI). From July 1, the definition of a fuel-efficient vehicle is changing to one with fuel consumption of under 3.5L/100km following the passing of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025. This change to the tax was implemented to drive uptake of more environmentally friendly models. Vehicles from Europe are also impacted by a five per cent import tariff, due to the absence of an FTA between Australia and the EU. But the proposed abolition of the LCT has been met with criticism from at least one of Labor's opponents, on the basis the government would be removing a tax from more expensive vehicles while also getting ready to impose penalties on brands that sell more popular, higher-emitting vehicles such as utes and SUVs as part of its New Vehicle Efficiency Standard (NVES). "I think it's a bit strange for the first act of a government to be giving a massive free kick to people who can afford very expensive European cars," Nationals Senator Matt Canavan told Sky News. "Why would we be making very expensive European cars cheaper while we make the average standard vehicles that Australians are struggling to afford more expensive?" In contrast, the Australian Automotive Dealer Association (AADA), the peak body for car dealers in Australia, has been among the voices domestically calling for the LCT to be scrapped, or at least significantly modified as part of a "wider root and branch review of Australia's automotive taxation regime". Calling it a "relic of an era when Australia manufactured vehicles" in its pre-budget submission this year, the AADA called for its "complete abolition". "The LCT was originally introduced as a means of protecting Australia's local vehicle manufacturing industry. With local manufacturing coming to an end in 2017, it just imposes unnecessary additional taxes on many vehicles, particularly more expensive lower emitting and EVs," the body said. The AADA argues it disincentives customers from buying new, safer and more environmentally friendly vehicles, and also penalises buyers – particularly those in regional areas – who require large SUVs and vehicle accessories that are aimed to improve safety. Vehicles from a range of mainstream auto brands, such as the Toyota LandCruiser, generate a significant proportion of LCT revenue raised, for example. "If the total abolition of the LCT cannot be achieved in a timely manner," the AADA argues, "then we propose reforms to the LCT, such as raising the threshold to target truly luxury vehicles and stage a sunset period for LCT, exempt low-emission vehicles and exclude accessories from the calculation of whether a vehicle hits the threshold forpaying the LCT." Content originally sourced from: The Australian Government is reportedly considering a gradual phase-out out the Luxury Car Tax (LCT) to minimise the impact on vehicle resale values, rather than axing it in one fell swoop. The Australian reports the Albanese government is assessing a progressive lowering of the controversial tax after car dealers and automakers warned its sudden removal could spark a rapid collapse in vehicle resale values. The removal of the LCT has been put on the table as the government negotiates with the European Union on establishing a free-trade agreement (FTA). However, the government reportedly won't scrap the LCT unless it can secure a better deal on agricultural exports to the EU. This had been a sticking point when previous Australia-EU negotiations on an FTA collapsed in 2023. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Axing the LCT will satisfy the EU, which has been pushing for it to be abolished for at least five years. It also comes as European brands have been confronted by tariffs in the lucrative US market imposed by President Donald Trump. The Australian reports around 40 per cent ($480 million) of the total $1.2 billion annual LCT revenue is raised from European vehicle sales. With the LCT removed, the Australian Government will likely need to find a replacement source of revenue, and that could come from a road user charge. The government has had to contend with a decline in fuel excise revenue as buyers move to more fuel-efficient vehicles, as well as electric vehicles (EVs). A road user charge could see vehicle owners pay an amount based on the distance they travel, with the revenue in turn being invested in road maintenance and infrastructure. The LCT adds 33 per cent to any part of a vehicle's price above the LCT threshold. This is currently $91,387 for fuel-efficient (ie: vehicles with fuel consumption of under 7.0L/100km) and electric vehicles (EVs), and $80,567 for all other vehicles. Thresholds are set annually by the government and are indexed to the Consumer Price Index (CPI). From July 1, the definition of a fuel-efficient vehicle is changing to one with fuel consumption of under 3.5L/100km following the passing of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025. This change to the tax was implemented to drive uptake of more environmentally friendly models. Vehicles from Europe are also impacted by a five per cent import tariff, due to the absence of an FTA between Australia and the EU. But the proposed abolition of the LCT has been met with criticism from at least one of Labor's opponents, on the basis the government would be removing a tax from more expensive vehicles while also getting ready to impose penalties on brands that sell more popular, higher-emitting vehicles such as utes and SUVs as part of its New Vehicle Efficiency Standard (NVES). "I think it's a bit strange for the first act of a government to be giving a massive free kick to people who can afford very expensive European cars," Nationals Senator Matt Canavan told Sky News. "Why would we be making very expensive European cars cheaper while we make the average standard vehicles that Australians are struggling to afford more expensive?" In contrast, the Australian Automotive Dealer Association (AADA), the peak body for car dealers in Australia, has been among the voices domestically calling for the LCT to be scrapped, or at least significantly modified as part of a "wider root and branch review of Australia's automotive taxation regime". Calling it a "relic of an era when Australia manufactured vehicles" in its pre-budget submission this year, the AADA called for its "complete abolition". "The LCT was originally introduced as a means of protecting Australia's local vehicle manufacturing industry. With local manufacturing coming to an end in 2017, it just imposes unnecessary additional taxes on many vehicles, particularly more expensive lower emitting and EVs," the body said. The AADA argues it disincentives customers from buying new, safer and more environmentally friendly vehicles, and also penalises buyers – particularly those in regional areas – who require large SUVs and vehicle accessories that are aimed to improve safety. Vehicles from a range of mainstream auto brands, such as the Toyota LandCruiser, generate a significant proportion of LCT revenue raised, for example. "If the total abolition of the LCT cannot be achieved in a timely manner," the AADA argues, "then we propose reforms to the LCT, such as raising the threshold to target truly luxury vehicles and stage a sunset period for LCT, exempt low-emission vehicles and exclude accessories from the calculation of whether a vehicle hits the threshold forpaying the LCT." Content originally sourced from:
The Advertiser
06-05-2025
- Automotive
- The Advertiser
Re-elected Labor government may scrap unpopular tax
Introduced in part to help protect Australian's car manufacturing industry, the Luxury Car Tax (LCT) has in recent years been derided as outdated and punitive – and now it looks like it could finally be on the chopping block.
Perth Now
02-05-2025
- Automotive
- Perth Now
Should the next government continue PHEV and EV subsidies?
It's federal election day in Australia, and while there are a plethora of questions around what the next government could bring, we're particularly concerned about those related to cars. Specifically, we're interested in financial incentives for buyers of electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs), which have been offered for a while now, to encourage the adoption of more low- and zero-emissions by Australians. One such program has been the fringe benefits tax (FBT) exemption, which applies to all EVs and – until April 1, 2025 – PHEVs priced under the Luxury Car Tax threshold for fuel-efficient vehicles and purchased through a novated lease. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Supplied Credit: CarExpert Under the scheme, the government effectively absorbs the cost of your employer's FBT bill, which would typically be passed on to you, bringing annual savings of up to five figures. Because this has been wound back to exclude PHEVs, and the Opposition has indicated it would also roll back FBT concessions for EVs if it wins government this weekend, we figured now was a good time to ask the CarExpert team whether it thinks the next government should continue with EV and PHEV subsidies. It's a controversial issue given PHEVs had just begun experiencing a sales boom with several new vehicles hitting the market in recent months, while EV sales continue to trend downwards. So the question we asked our crew was 'should the next government continue PHEV and EV subsidies?' Let us know what you think in the comments below. Easy answer. BYD Shark 6 PHEV Credit: CarExpert With record cost of living pressures and families struggling to put food on the table, wasting taxpayer dollars to incentivise the purchase of new cars is yet another waste of your money that could otherwise be spent on reducing the cost of living. As I wrote earlier in the year, the government has already blown out the original budgeted amount for FBT subsidies to the tune of over $450 million per year. To think that this poorly thought-out policy should continue any longer is crazy. Nobody, and I mean nobody, that has enough money to spend up to $90,000 on a new electric vehicle requires or deserves an FBT exemption for a new toy, it's as simple as that. That $500m per year could be better spent on helping those Australians that are currently struggling to survive. It's not a pot shot at anybody that has taken advantage of this subsidy. You'd be crazy to not legally reduce your taxable income wherever possible. But nobody could sit with a straight face and claim that this money couldn't be better spent. My final point here is that if it continues, it should be opened up to used electric vehicles as well. At the moment, it only applies to new electric vehicles, which simply necessitates the further mining of materials for the production of vehicles that will become highly depreciating, disposable assets. As Paul said, no one that is considering a $90,000-plus vehicle needs government help, but there's more than just that. Ranger Stormtrak PHEV Credit: CarExpert It's about the insane amount of taxes and charges the Australian Government puts on all new vehicles that come into Australia. Even if it falls under the luxury car tax, there are still import taxes, GST, stamp duties and more that the government collects along the journey of a car ending up in someone's driveway. If they really wanted to incentivise people to get into greener cars, they could roll back some of those, rather than offering rebates that only benefit a small percentage of the population. For those people who can't afford a $90,000 car, but want a greener footprint and don't have the option to purchase through a workplace, they could reduce the purchase price of cheaper vehicles to help someone purchase a hybrid or EV, rather than a used diesel or petrol product. For me, and many other Australians, EVs don't suit our use cases. So there is no benefit to me as a taxpayer to see a small percentage of the population be rewarded with a few dollars back in their pocket, when the vast majority of us just have to make it work at the full sticker price. Scrap the subsidies, and while you're at it, scrap the import taxes that were designed to protect an already failing local manufacturing industry. That will make all cars cheaper for everyone. Buyers of all vehicle types should be treated equally. Tesla Model Y EV Credit: CarExpert But if there are subsidies for new car buyers, they should go to low-income earners in the grip of this cost of living crisis – not upwardly mobile novated leasees who can afford an $85k-plus electrified vehicle. As it stands, new car buyers will already be forced to pay even higher prices than those we're already seeing due to inflation, supply chain blockages and the 'Covid tax' hangover, as carmakers pass on emissions-related fines to consumers in the coming years – depending on which political party governs Australia after today. Nobody's arguing we don't need to incentivise demand for more efficient vehicles, but a tax that penalises the most popular, fit-for-purpose vehicle type in this country today, and indirectly promotes mostly cheap electric cars, is not in the interests of the majority of consumers. And when automotive CO2 emissions are measured by governments at the tailpipe and not over a vehicle's lifecycle, let's not kid ourselves that EVs are lowering the carbon footprints of many drivers in a predominantly 'fossil' fuelled electricity grid like ours. When you factor in emissions from mining and manufacturing, most EVs don't become environmentally friendlier than equivalent combustion-powered models until about a decade after purchase, by which time they're likely to be beyond their use-by date. There never has been and never will be just one automotive powertrain solution, whether it's petrol, diesel, hybrid, plug-in hybrid, electric, range-extender electric or hydrogen fuel-cell electric. GWM Haval H6GT PHEV Credit: CarExpert But consumers will migrate to the most efficient vehicles that still suit their use cases, so let them vote with their feet by getting rid of not just the FBT exemption for EVs as well as PHEVs, but the FBT itself – along with the LCT, which was originally designed to protect the local car manufacturing industry we no longer have, as well as import duties on cars from countries we don't already have a free trade agreement with, plus state rego fees and fuel excise too. The latter raked in almost $16 billion for the federal government in the last financial year, but according to the AAA just 57 per cent of fuel excise revenue in the decade before the 2022-23 financial year was reinvested in public transport and road infrastructure – the purposes for which it was initially justified. So why not replace all those automotive taxes with a single road user charge that applies to all vehicles on a sliding scale based on emissions? And while we're at it, replace income tax with a royalty on all the natural resources currently exported overseas by foreign companies virtually for free, which would make all Australians as rich as they ought to be. Clearly I'm in the minority here, but as many markets around the world including Australia have proven, initial uptake and popularisation of alternative powertrains heavily relies on incentives. Cupra Formentor VZe PHEV Credit: CarExpert But, I'm willing to concede we need substantial reform around the entirety of vehicle and road user charges, and our system needs to be overhauled to be more in line with the likes of Europe and the UK. Instead of financial handouts or tax exemptions, we should have a tiered emissions class system and charge motorists accordingly – ie: cheaper registration, tolls and the like for low-emissions vehicles. The proposed road user tax for EVs should be a road user charge for all vehicles, scaled depending on a vehicle's emissions class, so it's not a half-baked revenue raiser that effectively penalises EV and PHEV owners. What I'm saying is that the numbers don't lie, and if we want to continue riding the current wave of low-emissions vehicle uptake, we need some form of concession to make it more attainable for the bulk of Australian buyers. The federal government's incentives may have served a purpose in making EVs more affordable and attractive to own, but it's a helping hand that's no longer required. BYD Dolphin EV Credit: CarExpert EV prices have dropped to the point where parity with equivalent ICE models has nearly been reached, and they will only become more attainable in the years to come. You can now buy a brand-new BYD Dolphin for less than $30,000, and the influx of new brands into our market has greatly improved choice in the sub-$50k bracket. What's more, the used market for EVs is growing and many are now available at bargain basement prices courtesy of steep depreciation. Quite simply, people don't need that extra push to go electric anymore, and the money would be better spent easing the cost of living pressures facing many Australians, or even on environmental initiatives that will offer more bang-for-buck. I don't disagree that more people should be considering PHEVs and EVs, especially when you consider how long it's been since such vehicles first started entering the Australian market. Supplied Credit: CarExpert Incentives were arguably necessary to convince people to give these cars a go at the start, but times have changed. Sales of PHEVs and EVs overseas prove there's a healthy appetite among average buyers. PHEVs and EVs are more established worldwide than they've ever been, yet despite incentives continuing until very recently, Australia has lagged significantly behind the rest of the developed world in terms of percentage uptake. This is despite Australians having access to an EV for less than $30,000 in the form of the BYD Dolphin, even if pricier options like the Tesla Model Y have sold in big numbers for several years. That suggests PHEVs and EVs themselves aren't the problem. There's no point in having subsidies for cars like these if a market isn't ready to accept them and, unfortunately, Australia isn't ready – even if people are desperate. That's because Australia's charging infrastructure is nowhere near where it needs to be to accept large-scale plug-in vehicle uptake. More chargers are popping up slowly, sure, but a quick look overseas reveals the scale of our deficit. Tesla has its nationwide Supercharger network in the USA, while China has possibly the most comprehensive EV charging network in the world. Renault Kangoo E-Tech EV Credit: CarExpert The latter is thanks to strong support from the Chinese government, partly through providing aid to its EV brands to get them up and running, but mostly through investing huge sums of money in expanding and fortifying its charging network, which makes it a lot easier for consumers to consider making the jump. In Australia, we're past the point of telling people PHEVs and EVs are good and reliable. What's needed now is a considerable expansion of Australia's charging network to be able to support these vehicles, and that's where government subsidies and incentives should go. There's already the $500 million Driving the Nation Fund, which has $39.3 million allocated for the installation of just 117 EV chargers on Australia's key highway routes. That's hardly anything when you consider charging times and the availability of traditional petrol stations. Another $60 million has been put towards EV charger installation at car dealerships and EV repairers, which doesn't directly help daily EV drivers who simply need to charge. Instead of worrying about getting people into PHEVs and EVs through incentives, funding should go into a much more concerted effort to rapidly expand Australia's public charging network. Once the infrastructure's there, the buyers will come.
West Australian
02-05-2025
- Automotive
- West Australian
Should the next government continue PHEV and EV subsidies?
It's federal election day in Australia, and while there are a plethora of questions around what the next government could bring, we're particularly concerned about those related to cars. Specifically, we're interested in financial incentives for buyers of electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs), which have been offered for a while now, to encourage the adoption of more low- and zero-emissions by Australians. One such program has been the fringe benefits tax (FBT) exemption, which applies to all EVs and – until April 1, 2025 – PHEVs priced under the Luxury Car Tax threshold for fuel-efficient vehicles and purchased through a novated lease. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now . Under the scheme, the government effectively absorbs the cost of your employer's FBT bill, which would typically be passed on to you, bringing annual savings of up to five figures. Because this has been wound back to exclude PHEVs, and the Opposition has indicated it would also roll back FBT concessions for EVs if it wins government this weekend, we figured now was a good time to ask the CarExpert team whether it thinks the next government should continue with EV and PHEV subsidies. It's a controversial issue given PHEVs had just begun experiencing a sales boom with several new vehicles hitting the market in recent months, while EV sales continue to trend downwards. So the question we asked our crew was 'should the next government continue PHEV and EV subsidies?' Let us know what you think in the comments below. Easy answer. With record cost of living pressures and families struggling to put food on the table, wasting taxpayer dollars to incentivise the purchase of new cars is yet another waste of your money that could otherwise be spent on reducing the cost of living. As I wrote earlier in the year, the government has already blown out the original budgeted amount for FBT subsidies to the tune of over $450 million per year. To think that this poorly thought-out policy should continue any longer is crazy. Nobody, and I mean nobody, that has enough money to spend up to $90,000 on a new electric vehicle requires or deserves an FBT exemption for a new toy, it's as simple as that. That $500m per year could be better spent on helping those Australians that are currently struggling to survive. It's not a pot shot at anybody that has taken advantage of this subsidy. You'd be crazy to not legally reduce your taxable income wherever possible. But nobody could sit with a straight face and claim that this money couldn't be better spent. My final point here is that if it continues, it should be opened up to used electric vehicles as well. At the moment, it only applies to new electric vehicles, which simply necessitates the further mining of materials for the production of vehicles that will become highly depreciating, disposable assets. As Paul said, no one that is considering a $90,000-plus vehicle needs government help, but there's more than just that. It's about the insane amount of taxes and charges the Australian Government puts on all new vehicles that come into Australia. Even if it falls under the luxury car tax, there are still import taxes, GST, stamp duties and more that the government collects along the journey of a car ending up in someone's driveway. If they really wanted to incentivise people to get into greener cars, they could roll back some of those, rather than offering rebates that only benefit a small percentage of the population. For those people who can't afford a $90,000 car, but want a greener footprint and don't have the option to purchase through a workplace, they could reduce the purchase price of cheaper vehicles to help someone purchase a hybrid or EV, rather than a used diesel or petrol product. For me, and many other Australians, EVs don't suit our use cases. So there is no benefit to me as a taxpayer to see a small percentage of the population be rewarded with a few dollars back in their pocket, when the vast majority of us just have to make it work at the full sticker price. Scrap the subsidies, and while you're at it, scrap the import taxes that were designed to protect an already failing local manufacturing industry. That will make all cars cheaper for everyone. Buyers of all vehicle types should be treated equally. But if there are subsidies for new car buyers, they should go to low-income earners in the grip of this cost of living crisis – not upwardly mobile novated leasees who can afford an $85k-plus electrified vehicle. As it stands, new car buyers will already be forced to pay even higher prices than those we're already seeing due to inflation, supply chain blockages and the 'Covid tax' hangover, as carmakers pass on emissions-related fines to consumers in the coming years – depending on which political party governs Australia after today. Nobody's arguing we don't need to incentivise demand for more efficient vehicles, but a tax that penalises the most popular, fit-for-purpose vehicle type in this country today, and indirectly promotes mostly cheap electric cars, is not in the interests of the majority of consumers. And when automotive CO2 emissions are measured by governments at the tailpipe and not over a vehicle's lifecycle, let's not kid ourselves that EVs are lowering the carbon footprints of many drivers in a predominantly 'fossil' fuelled electricity grid like ours. When you factor in emissions from mining and manufacturing, most EVs don't become environmentally friendlier than equivalent combustion-powered models until about a decade after purchase, by which time they're likely to be beyond their use-by date. There never has been and never will be just one automotive powertrain solution, whether it's petrol, diesel, hybrid, plug-in hybrid, electric, range-extender electric or hydrogen fuel-cell electric. But consumers will migrate to the most efficient vehicles that still suit their use cases, so let them vote with their feet by getting rid of not just the FBT exemption for EVs as well as PHEVs, but the FBT itself – along with the LCT, which was originally designed to protect the local car manufacturing industry we no longer have, as well as import duties on cars from countries we don't already have a free trade agreement with, plus state rego fees and fuel excise too. The latter raked in almost $16 billion for the federal government in the last financial year, but according to the AAA just 57 per cent of fuel excise revenue in the decade before the 2022-23 financial year was reinvested in public transport and road infrastructure – the purposes for which it was initially justified. So why not replace all those automotive taxes with a single road user charge that applies to all vehicles on a sliding scale based on emissions? And while we're at it, replace income tax with a royalty on all the natural resources currently exported overseas by foreign companies virtually for free, which would make all Australians as rich as they ought to be. Clearly I'm in the minority here, but as many markets around the world including Australia have proven, initial uptake and popularisation of alternative powertrains heavily relies on incentives. But, I'm willing to concede we need substantial reform around the entirety of vehicle and road user charges, and our system needs to be overhauled to be more in line with the likes of Europe and the UK. Instead of financial handouts or tax exemptions, we should have a tiered emissions class system and charge motorists accordingly – ie: cheaper registration, tolls and the like for low-emissions vehicles. The proposed road user tax for EVs should be a road user charge for all vehicles, scaled depending on a vehicle's emissions class, so it's not a half-baked revenue raiser that effectively penalises EV and PHEV owners. What I'm saying is that the numbers don't lie, and if we want to continue riding the current wave of low-emissions vehicle uptake, we need some form of concession to make it more attainable for the bulk of Australian buyers. The federal government's incentives may have served a purpose in making EVs more affordable and attractive to own, but it's a helping hand that's no longer required. EV prices have dropped to the point where parity with equivalent ICE models has nearly been reached, and they will only become more attainable in the years to come. You can now buy a brand-new BYD Dolphin for less than $30,000, and the influx of new brands into our market has greatly improved choice in the sub-$50k bracket. What's more, the used market for EVs is growing and many are now available at bargain basement prices courtesy of steep depreciation. Quite simply, people don't need that extra push to go electric anymore, and the money would be better spent easing the cost of living pressures facing many Australians, or even on environmental initiatives that will offer more bang-for-buck. I don't disagree that more people should be considering PHEVs and EVs, especially when you consider how long it's been since such vehicles first started entering the Australian market. Incentives were arguably necessary to convince people to give these cars a go at the start, but times have changed. Sales of PHEVs and EVs overseas prove there's a healthy appetite among average buyers. PHEVs and EVs are more established worldwide than they've ever been, yet despite incentives continuing until very recently, Australia has lagged significantly behind the rest of the developed world in terms of percentage uptake. This is despite Australians having access to an EV for less than $30,000 in the form of the BYD Dolphin , even if pricier options like the Tesla Model Y have sold in big numbers for several years. That suggests PHEVs and EVs themselves aren't the problem. There's no point in having subsidies for cars like these if a market isn't ready to accept them and, unfortunately, Australia isn't ready – even if people are desperate. That's because Australia's charging infrastructure is nowhere near where it needs to be to accept large-scale plug-in vehicle uptake. More chargers are popping up slowly, sure, but a quick look overseas reveals the scale of our deficit. Tesla has its nationwide Supercharger network in the USA, while China has possibly the most comprehensive EV charging network in the world. The latter is thanks to strong support from the Chinese government, partly through providing aid to its EV brands to get them up and running, but mostly through investing huge sums of money in expanding and fortifying its charging network, which makes it a lot easier for consumers to consider making the jump. In Australia, we're past the point of telling people PHEVs and EVs are good and reliable. What's needed now is a considerable expansion of Australia's charging network to be able to support these vehicles, and that's where government subsidies and incentives should go. There's already the $500 million Driving the Nation Fund, which has $39.3 million allocated for the installation of just 117 EV chargers on Australia's key highway routes. That's hardly anything when you consider charging times and the availability of traditional petrol stations. Another $60 million has been put towards EV charger installation at car dealerships and EV repairers, which doesn't directly help daily EV drivers who simply need to charge. Instead of worrying about getting people into PHEVs and EVs through incentives, funding should go into a much more concerted effort to rapidly expand Australia's public charging network. Once the infrastructure's there, the buyers will come.
7NEWS
02-05-2025
- Automotive
- 7NEWS
Should the next government continue PHEV and EV subsidies?
It's federal election day in Australia, and while there are a plethora of questions around what the next government could bring, we're particularly concerned about those related to cars. Specifically, we're interested in financial incentives for buyers of electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs), which have been offered for a while now, to encourage the adoption of more low- and zero-emissions by Australians. One such program has been the fringe benefits tax (FBT) exemption, which applies to all EVs and – until April 1, 2025 – PHEVs priced under the Luxury Car Tax threshold for fuel-efficient vehicles and purchased through a novated lease. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Under the scheme, the government effectively absorbs the cost of your employer's FBT bill, which would typically be passed on to you, bringing annual savings of up to five figures. Because this has been wound back to exclude PHEVs, and the Opposition has indicated it would also roll back FBT concessions for EVs if it wins government this weekend, we figured now was a good time to ask the CarExpert team whether it thinks the next government should continue with EV and PHEV subsidies. It's a controversial issue given PHEVs had just begun experiencing a sales boom with several new vehicles hitting the market in recent months, while EV sales continue to trend downwards. So the question we asked our crew was 'should the next government continue PHEV and EV subsidies?' Let us know what you think in the comments below. Paul Maric: No Easy answer. With record cost of living pressures and families struggling to put food on the table, wasting taxpayer dollars to incentivise the purchase of new cars is yet another waste of your money that could otherwise be spent on reducing the cost of living. As I wrote earlier in the year, the government has already blown out the original budgeted amount for FBT subsidies to the tune of over $450 million per year. To think that this poorly thought-out policy should continue any longer is crazy. Nobody, and I mean nobody, that has enough money to spend up to $90,000 on a new electric vehicle requires or deserves an FBT exemption for a new toy, it's as simple as that. That $500m per year could be better spent on helping those Australians that are currently struggling to survive. It's not a pot shot at anybody that has taken advantage of this subsidy. You'd be crazy to not legally reduce your taxable income wherever possible. But nobody could sit with a straight face and claim that this money couldn't be better spent. My final point here is that if it continues, it should be opened up to used electric vehicles as well. At the moment, it only applies to new electric vehicles, which simply necessitates the further mining of materials for the production of vehicles that will become highly depreciating, disposable assets. Sean Lander: No As Paul said, no one that is considering a $90,000-plus vehicle needs government help, but there's more than just that. It's about the insane amount of taxes and charges the Australian Government puts on all new vehicles that come into Australia. Even if it falls under the luxury car tax, there are still import taxes, GST, stamp duties and more that the government collects along the journey of a car ending up in someone's driveway. If they really wanted to incentivise people to get into greener cars, they could roll back some of those, rather than offering rebates that only benefit a small percentage of the population. For those people who can't afford a $90,000 car, but want a greener footprint and don't have the option to purchase through a workplace, they could reduce the purchase price of cheaper vehicles to help someone purchase a hybrid or EV, rather than a used diesel or petrol product. For me, and many other Australians, EVs don't suit our use cases. So there is no benefit to me as a taxpayer to see a small percentage of the population be rewarded with a few dollars back in their pocket, when the vast majority of us just have to make it work at the full sticker price. Scrap the subsidies, and while you're at it, scrap the import taxes that were designed to protect an already failing local manufacturing industry. That will make all cars cheaper for everyone. Marton Pettendy: No Buyers of all vehicle types should be treated equally. But if there are subsidies for new car buyers, they should go to low-income earners in the grip of this cost of living crisis – not upwardly mobile novated leasees who can afford an $85k-plus electrified vehicle. As it stands, new car buyers will already be forced to pay even higher prices than those we're already seeing due to inflation, supply chain blockages and the 'Covid tax' hangover, as carmakers pass on emissions-related fines to consumers in the coming years – depending on which political party governs Australia after today. Nobody's arguing we don't need to incentivise demand for more efficient vehicles, but a tax that penalises the most popular, fit-for-purpose vehicle type in this country today, and indirectly promotes mostly cheap electric cars, is not in the interests of the majority of consumers. And when automotive CO2 emissions are measured by governments at the tailpipe and not over a vehicle's lifecycle, let's not kid ourselves that EVs are lowering the carbon footprints of many drivers in a predominantly 'fossil' fuelled electricity grid like ours. When you factor in emissions from mining and manufacturing, most EVs don't become environmentally friendlier than equivalent combustion-powered models until about a decade after purchase, by which time they're likely to be beyond their use-by date. There never has been and never will be just one automotive powertrain solution, whether it's petrol, diesel, hybrid, plug-in hybrid, electric, range-extender electric or hydrogen fuel-cell electric. But consumers will migrate to the most efficient vehicles that still suit their use cases, so let them vote with their feet by getting rid of not just the FBT exemption for EVs as well as PHEVs, but the FBT itself – along with the LCT, which was originally designed to protect the local car manufacturing industry we no longer have, as well as import duties on cars from countries we don't already have a free trade agreement with, plus state rego fees and fuel excise too. The latter raked in almost $16 billion for the federal government in the last financial year, but according to the AAA just 57 per cent of fuel excise revenue in the decade before the 2022-23 financial year was reinvested in public transport and road infrastructure – the purposes for which it was initially justified. So why not replace all those automotive taxes with a single road user charge that applies to all vehicles on a sliding scale based on emissions? And while we're at it, replace income tax with a royalty on all the natural resources currently exported overseas by foreign companies virtually for free, which would make all Australians as rich as they ought to be. James Wong: Yes Clearly I'm in the minority here, but as many markets around the world including Australia have proven, initial uptake and popularisation of alternative powertrains heavily relies on incentives. But, I'm willing to concede we need substantial reform around the entirety of vehicle and road user charges, and our system needs to be overhauled to be more in line with the likes of Europe and the UK. Instead of financial handouts or tax exemptions, we should have a tiered emissions class system and charge motorists accordingly – ie: cheaper registration, tolls and the like for low-emissions vehicles. The proposed road user tax for EVs should be a road user charge for all vehicles, scaled depending on a vehicle's emissions class, so it's not a half-baked revenue raiser that effectively penalises EV and PHEV owners. What I'm saying is that the numbers don't lie, and if we want to continue riding the current wave of low-emissions vehicle uptake, we need some form of concession to make it more attainable for the bulk of Australian buyers. Josh Nevett: No The federal government's incentives may have served a purpose in making EVs more affordable and attractive to own, but it's a helping hand that's no longer required. EV prices have dropped to the point where parity with equivalent ICE models has nearly been reached, and they will only become more attainable in the years to come. You can now buy a brand-new BYD Dolphin for less than $30,000, and the influx of new brands into our market has greatly improved choice in the sub-$50k bracket. What's more, the used market for EVs is growing and many are now available at bargain basement prices courtesy of steep depreciation. Quite simply, people don't need that extra push to go electric anymore, and the money would be better spent easing the cost of living pressures facing many Australians, or even on environmental initiatives that will offer more bang-for-buck. Max Davies: No I don't disagree that more people should be considering PHEVs and EVs, especially when you consider how long it's been since such vehicles first started entering the Australian market. Incentives were arguably necessary to convince people to give these cars a go at the start, but times have changed. Sales of PHEVs and EVs overseas prove there's a healthy appetite among average buyers. PHEVs and EVs are more established worldwide than they've ever been, yet despite incentives continuing until very recently, Australia has lagged significantly behind the rest of the developed world in terms of percentage uptake. This is despite Australians having access to an EV for less than $30,000 in the form of the BYD Dolphin, even if pricier options like the Tesla Model Y have sold in big numbers for several years. That suggests PHEVs and EVs themselves aren't the problem. There's no point in having subsidies for cars like these if a market isn't ready to accept them and, unfortunately, Australia isn't ready – even if people are desperate. That's because Australia's charging infrastructure is nowhere near where it needs to be to accept large-scale plug-in vehicle uptake. More chargers are popping up slowly, sure, but a quick look overseas reveals the scale of our deficit. Tesla has its nationwide Supercharger network in the USA, while China has possibly the most comprehensive EV charging network in the world. The latter is thanks to strong support from the Chinese government, partly through providing aid to its EV brands to get them up and running, but mostly through investing huge sums of money in expanding and fortifying its charging network, which makes it a lot easier for consumers to consider making the jump. In Australia, we're past the point of telling people PHEVs and EVs are good and reliable. What's needed now is a considerable expansion of Australia's charging network to be able to support these vehicles, and that's where government subsidies and incentives should go. There's already the $500 million Driving the Nation Fund, which has $39.3 million allocated for the installation of just 117 EV chargers on Australia's key highway routes. That's hardly anything when you consider charging times and the availability of traditional petrol stations. Another $60 million has been put towards EV charger installation at car dealerships and EV repairers, which doesn't directly help daily EV drivers who simply need to charge. Instead of worrying about getting people into PHEVs and EVs through incentives, funding should go into a much more concerted effort to rapidly expand Australia's public charging network. Once the infrastructure's there, the buyers will come.
