The significant consequences of the former government’s decision to make people keep records to justify their FBT concession simply show what a rort it was in the first place. Obviously, lots ofpeople are claiming concessions to which they are not entitled.

For all the words in this article, not a hint of why purchase and use of cars should be subsidised in a way that other economic activity (equally good for creating jobs, helping the economy, etc, etc) is not.

In particular, where the author says
"Principally this policy was put in place not because of any intrinsic problem with FBT concessions ..."
that may be true, but the dramatic effect of the government's actions shows how significant the concessions were, concessions that don't apply to things people might otherwise do with their money. To me that's an "intrinsic problem"

Why put thieves in jail? Obviously they are a great asset to the economy, forcing those people who were burgled to re-purchase the goods they are missing!

Why not even provide free TAFE courses in burglary as a career option?

Shame on the "Liberal" party, who in this case are even more socialist than Labor, stealing the money of people who either don't have cars or pay for their car and car-expenses out-of-pocket, then gifting it to others who receive free corporate/government cars for private use.

Unintentionally, this article proves two things:

1) The true costs of propping up Australia’s lame-dog car industry are even larger than the obvious drain caused by tariff protection and direct subsidies
2) Policymakers should think long and hard before introducing special treatment for favoured industries and regions, because the pain caused when it comes time to withdraw the largesse (as invariably it should) usually exceeds the gains.

Yuyutsu is spot on. There is not even a pretence that the FBT concession makes economic sense or is defensible in principle. The article is pure special pleading on behalf of those who will lose because of its withdrawal.

It also demonstrates a more insidious point. The currently structure of the FBT system gives most proportional benefit to large but non-luxury vehicles like Falcons and Commodores – in other words, cars that Australian producers specialise in. These are the cars whose sales fell most sharply when their FBT crutch was kicked away. But fewer and fewer people want these types of cars, either in Australia or overseas. Overseas manufacturers adapted by focussing on the small, fuel-efficient vehicles that drivers increasingly want. But in Australia, the tax rort distorted demand, encouraging manufacturers to continue producing cars which, it turns out, no-one really wants. This, not lack of government support, could be what kills our car industry.

I have some sympathy with a view that tax reforms like these should be phased in to allow the industry time to adjust; but no sympathy at all for maintaining the favourable FBT on cars.

Just another example of the great(albeit recent) Australian tradition of middle class welfare.
John your statement that 75% of company cars were being driven by people earning less than $100 000 per year raises a few questions and answers.
How many of these 'company cars' and the 25% of cars driven by earners bringing in over $100 000 are used for company business?
Not many, as evidenced by the song and dance.
It's a rort mate.
How much lees than $100 000 are they earning?
Not much.
It's a rort mate.
Apart from Holdens and Fords what about the Maserati, Porsche, Ferrari?
It's a rort mate.
I am a WAGE earner and we don't get to SALARY sacrifice.
We pay for our cars after we pay income tax and pay for a lot of other peoples cars from all accounts.
It's a rort mate.

"It did not make sense to pump all these funds into the production side of the local car making equation, only to choke off the demand side by cutting the FBT concessions."

If we're about local manufacturing why does this perk for the wealthy apply to foreign cars. Whether money gets to our manufacturers by the front door by direct injection of public money, or via the FBT back door, shouldn't it support only Australian cars, and perhaps only the smaller more efficient models at that?

Luciferase
Spot on. Wouldn't it be great? A car that was made in Australia by an Australian owned company (perhaps the much lauded public/private partnership) specifically for the sector this section of FBT covers.

A base model electric/hybrid with optional variations to suit specific purpose.

It would be a bold and visionary Government that would step on the corporate toes of car manufacturers and have to formulate special R&D treatment for the project

I won't be holding my breath

It makes me spew that I must pay more tax so the rich can ponce about more cheaply in luxury foreign cars. What are we supporting, car salesmen?

Not only do we support car salesmen and rich ponces, we also provide cars for women of calibre and men who aspire to take their brats school,go four wheel driving on weekends and let their delusions of grandeur manifest.
I worked with these middle management dupes and their misconception of wealth for several years and it was always a constant source of amusement for me and one other socially minded workmate that they would prefer a better/newer 'company car' than a pay rise.

Even more amusing was looking at the 2 old utes parked front and centre in the office car park and the manager continuously offering to 'salary sacrifice' new cars for us. His and the business owners political beliefs (welded on LIBERAL) wouldn't allow him to admit these cars were paid for by the average Joe/Joanne taxpayer, as a result easy pickings for a pay rise.

The down side is the fact that the afore mentioned dupes' held a strong sense of entitlement and bugger the rest attitude.

You have every right to spew

Do you people ever bother with the facts before you go shooting your mouths off?

The facts of the matter is that the largest percentage by far using this system are public servants. They are teachers, nurses & charity workers, not the "pouncing" rich.

Do grow up folks, the rich drive fully company owned cars & have no need of this bit of payola.

I do wonder if the same option is available to check out chicks, & other poorly paid workers, as to these quite well paid public sector people.

I do agree however, that there doesn't seem to be much reason to give these people a tax reduction on new cars.

If we want a car industry, & many do, it makes more sense to make buying locally made cars mandatory for all government departments, local government organisations, & publicly funded bodies as well.

The teachers, nurses etc are all earning well above the majority of wage earners and you can stop wondering 'check out chicks' are flat out paying for their bus fares.
The vehicles that aren't being used for business should not be treated as such.
Why do they deserve a vehicle that is partially funded by the taxpayers that aren't afforded these tax breaks/rorts?
Of the people I worked with the only one that could really be considered and that was a bit iffy was the manager's car and even then he didn't really need a top of the range Land-cruiser for a city run about. As for the rest they were used solely for personal transport.

I agree, Hasbeen, with "If we want a car industry, & many do, it makes more sense to make buying locally made cars mandatory for all government departments, local government organisations, & publicly funded bodies as well."

Nevertheless, it would appear most cars supposedly used for income earning purposes are not, judging from the hoopla and the plunge in the leasing business. Please explain why the taxpayer subsidy should apply, and especially to foreign cars. For you perhaps it's just a case of if Tony wants it it must be good, like PPL?

If you want a local car industry, then you should buy a local car to support it.

And if you paid less tax, then you would have more money in your pocket to buy that local car.

Today people no longer buy cars - they buy computers on wheels.
If real cars were made in Australia, such good, stable, easy to maintain and lasting models as they used to make until the 1980's or about 1992 without computerised gadgets, then I will be very happy to dig into my pocket and buy a new car of such model.

Most electronic parts of modern cars cannot be produced in Australia even when the rest of the car is, because producing computer chips requires such specialised factories where the silicon layers are constructed in total vacuum. Very few countries have them, which makes Australian car-manufacturers totally dependent and may bring Australian car-makers to their knees when foreign interests dictate.

Why don't the car companies ask real people what sort of cars they want?
- they currently don't need to because they currently only need to consult with other corporations and the government, not with people.

Why should I be subsidising other people's computers?

You've won me Yuyutsu, but they don't have to be that modern for me. I'll take an original 68 Holden Monaro thanks.

I'll even settle for an FJ Holden. They should be able to retail them for about 7 or 8000 dollars. They would probably fix the overpopulation problem too, so a win win, & a huge reduction in resource used too.

I currently drive an 80 model Triumph, the restoration of which cost more than a new HH, horrible hatch, so it is definitely by choice.