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?