Carbon tax change sparks sales rout fears

UPDATED: 16/07/2013 4:50PMSWEEPING changes to the way vehicles are taxed could have wide-reaching repercussions on new-car sales, and especially locally made models, the industry has warnedPart of a money-saving grab by the federal government in response to changes to the carbon tax announced today, the reforms could affect up to a third of the new-car market – about 363,000 vehicles – according to the Federal Chamber of Automotive Industries (FCAI).

FCAI chief executive Tony Weber has warned the removal of fringe benefits tax incentives would cut deeply into the 1.1-million-plus new-vehicle sales in Australia.

Meanwhile, Toyota Australia said the revision had the potential to devastate its business in Australia if the government went ahead with it.

Late today, publicly listed salary packaging specialist McMillan Shakespeare, which develops salary packages that specialise in cars, called for a trading halt after the value of its shares plummeted almost 15 per cent.

In a statement to the Australian stock exchange, the company said the government’s changes, if implemented, would have a “material impact” on its business.

The industry warnings come after prime minister Kevin Rudd today confirmed his government would remove the $25 a tonne carbon tax introduced last year by his predecessor, Julia Gillard, and replace it with an emissions trading scheme that would reduce the cost to about $6 a tonne from July next year.

Mr Rudd said the move to the ETS would save families about $380 a year, as well as reduce running costs for small businesses.

However, winding back the carbon tax has left a $3.8 billion hole in the federal budget, with treasurer Chris Bowen saying it could fill in $1.8 billion of that shortfall by abolishing an automatic 20 per cent fringe benefits tax entitlement for cars.

Toyota Australia media and external affairs manager Beck Angel said the car-maker would have to study the broader impact to its business.

“Our initial assessment is the proposed change has the potential to have a major impact on the new-car market in Australia,” Ms Angel said.

“As market leader, this would significantly affect Toyota and in particular our locally built vehicles which are heavily reliant on sales to business and government fleets.

“We strongly support the FCAI’s call to government to reconsider this policy.”

The FCAI’s Mr Weber said Australia’s car-making industry needed long-term planning.

“The government’s announcement today, to introduce changes from today, undermines the long-term certainty the FCAI and its members have repeatedly called for from government,” Mr Weber said in a statement.

Mr Weber said the change would flow right through the industry, including to dealerships and service centres.

“I want to know if the government truly understands the consequences of this decision, and why the industry was not consulted on such a significant change,” Mr Weber said.

“The FCAI is yet to do precise calculations but we estimate, from today, this could impact on around a third of new car sales.

“I fear what this means for domestic manufacturing and I am urgently seeking meetings with the government to encourage them to reconsider this decision.” Toyota Australia is the only local car-maker counted among a list of Australia’s 370 biggest commercial polluters that will benefit from the new emissions trading system.

Ms Angel said the Australian arm of the Japanese car-maker welcomed any change that will align the cost of carbon with international pricing.

“Given the competitive nature of the Australian car market, it is important that our locally built cars are not disadvantaged by higher costs compared to import vehicles,” she said.

Toyota has previously said the $25 a tonne tax was costing it about $114 for each locally made Camry and Aurion rolling out of its Altona-based assembly line.

Ford was equally optimistic about the carbon tax, saying the change to the ETS would help reduce the input costs of locally made vehicles.

“With so many unknowns it’s impossible to quantify the value of the change but it won’t be a huge cost reduction,” said Ford Australia brand communications manager Neil McDonald.

“It won’t have any effect on new vehicle prices as local manufacturers are absorbing the effect of the carbon price.

“At this point, we don’t know what this change will mean from an administration viewpoint.”

Holden, meanwhile, said it was too early to assess what impact the changes coming from the move to an emissions trading system would have on its operations.

“We need to work through what the impact may or may not be, so we’re really unable to comment beyond that,” said Holden corporate affairs manager Sean Poppitt.

“That announcement (about the ETS) has been made and the guys are starting to look at what impact it may or may not have, and anything that could potentially reduce the cost to build is welcome.

“But until we punch through the numbers, we can’t tell.”

Mr Poppitt did not answer if today’s announcement reflected Holden chief executive Mike Devereux’s call for the federal government to provide “clear, consistent and competitive government policy” over a long timeframe.

WHAT TREASURER CHRIS BOWEN SAID:

“Now the current statutory formula allows people claiming fringe benefits tax relief to just nominate a figure of 20 per cent, and to not justify that claim.

“The world has moved on from when this system was introduced in 1986 – we now have much better technology so that people can use phone apps and other devices which are much easier than keeping a logbook.

“The rule stipulates that it is necessary to keep a logbook for up to 12 weeks over a five-year period, but this can now be done through mobile phone technology and applications which are easily downloadable on the web.

“This means that people can claim this if they are entitled to it very easily, and there is no longer any justification for the statutory percentage method of claiming fringe benefits tax.”