Abbott vows tax fight as more jobs go

OPPOSITION leader Tony Abbott has vowed to fight planned changes to tax laws for leased cars, labelling Labor’s proposal as a “lawyer’s picnic”.

Mr Abbott’s announcement that he would dump the tax if elected and oppose it if in opposition comes as one of Australia’s largest car salary sacrificing companies called the industry’s struggle to overturn the tax as a watershed moment for Australian business.

Mr Abbott and shadow ministers including treasurer Joe Hockey, finance minister Andrew Robb and industry minister Sophie Mirabella today met with more than 30 representatives from the car industry to talk over proposed changes to tax laws that previously assumed up to 20 per cent of a leased or salary-sacrificed car’s use was personal, capping the amount of fringe benefits tax paid.

“It is absolutely clear that the government's FBT changes are costing jobs now, they’re costing sales now, they're destroying investment now, they are badly damaging an industry that is already under pressure,” Mr Abbott said after meeting the industry workers representing car-makers, dealers, service centres, spare-parts suppliers and novated lease companies.

“This is typical of the bad policy that we get from Mr Rudd and his Government.

This is very bad policy. It will increase red tape.

“It will damage aspirational Australia and almost certainly it won't collect the revenue that it's claimed because of the damage that it will do to economic activity,” he said.

Mr Abbott said the proposed changes to the fringe benefits tax would have “ramifications far beyond those that were anticipated by the Government and its advisers”.

“It has ramifications in the industrial sphere because there are so many workers, perhaps hundreds of thousands of workers, whose company vehicles impact on their enterprise bargaining agreements,” he said.

“So, this is going to be at the very least a lawyer's picnic as well as an enormous hit on everyone, an enormous tax hit on everyone who has a company vehicle.”

Andrew McKellar, the executive director of the Australian Automobile Association representing motoring groups, said Labor’s change to the tax laws had unified both the car-making industry and market.

“Certainly, we know that it will impact many, many people through their remuneration arrangements, far more than the 320,000 that have been suggested by the government,” Mr McKellar said.

“It is a measure which will impact in terms of increased red tape on businesses right across the spectrum.

“It is impacting on sales in the industry right now, quite severely and that is something that needs to be addressed urgently.

“So, we certainly welcome the fact that the Coalition has indicated that it will strongly oppose this measure.”

Mr McKellar called on the government to rethink its decision.

“There is a unified coalition of stakeholders building on this issue. They will not go away. They will take the fight up on this issue until this policy is changed.”

Meanwhile, Melbourne-based salary packaging group Fleetcare today said it would need to axe 20 jobs across Perth, Sydney and Melbourne in response to the proposed tax law changes.

The company is the latest in a rush of job cuts sweeping the novated lease industry in the wake of last week’s announcement.

Fleetcare chief executive Nigel Malcolm said the fight against the Rudd government’s reforms was a watershed moment for Australian business.

He said the leasing side his business, which looks after about 32,000 vehicles Australia-wide, had suffered a 98 percent drop as the novated lease side of his business went from a “flood to a trickle”.

“We’ve had customers on the cusp of signing up saying they now don’t want to sign the forms,” he said.

“There are now 10,500 cars on hold at dealerships throughout Australia because of this ... parked on grass.”

Mr Malcolm said businesses had to respond quickly to the proposed changes before they started costing too much money.

“I’ve got people here who have been working for me for 18 years,” he said. “It’s a sad day when you have to stand in front of them and tell them they might not have a job.”