Sales incentive on the brink

FEDERAL legislation for a critical 30 per cent business tax incentive to stimulate the flagging car industry will not be formally enacted until at least mid-June unless it passes through both houses of parliament by the end of this week.

With the incentive set to expire on June 30, the delay in enacting the legislation appears to have already diminished its desired affect and industry sources suggest there is already a strong argument for extending the cut-off by a couple of months.

Sales figures reveal that the expected boom in sales of light commercial vehicles has not eventuated, with LCV sales down 27.9 per cent in April – more than the overall industry drop of 23.9 per cent.

The Bill is scheduled to finally go before the House of Representatives and then the Senate in this week’s session, but both houses are scheduled to break after Thursday, with the Senate not due to sit again until June 15.

The government agreed on the stimulus package three months ago, but drafting of the legislation appears to have taken longer than expected and further delays have been caused by the amount of government business and the schedule of parliamentary sitting sessions.

Left: FCAI chief executive Andrew McKellar.

Federal Chamber of Automotive Industries chief executive Andrew McKellar fears that businesses have been advised not to act on the higher depreciation allowance until it becomes law, but believes there is no danger the Bill will be defeated.

Although there is a recent precedent in the so-called ‘alcopops Bill’ – which was ultimately defeated after extra tax had been collected from consumers for a number of months – Mr McKellar told GoAuto there was no opposition to the business tax incentive in parliament.

“It’s quite a different set of circumstances (to alcopops) it has the very strong support of industry and there’s nothing that we’ve seen from any group in the Senate that they oppose it,” said Mr McKellar.

“That being the case, we would be hopeful that it will go through smoothly and seamlessly from here.

“The indications we have is that the Opposition have said that they won’t frustrate its passage (but) we would prefer to see them making a more positive comment about it.

“The position of the industry is that we think it is a valuable incentive and we would want to encourage its speedy passage, so we want to see that occur as soon as possible.” Mr McKellar believes that individual tax advisers are naturally cautious about advising their clients to by a new vehicle until the Bill becomes law and has consequently renewed calls for the government to extend the cut-off in order to ensure it achieves its intended outcome.

“Given the late timing, I think it does provide grounds for the government to extend it beyond the 30th of June,” said Mr McKellar.

“It’s an existing policy measure and, in the interests of maximising it effectively, there’s a strong argument for some extension for a further period and we’ll just have to wait and see if that’s the government’s assessment.” The FCAI is only one of a number of business groups seeking the cut-off extension, which could be announced in tonight’s Federal Budget or be incorporated in the legislation.

“We would be very keen to see (the legislation) progress this week if possible and, if the government was of a view to perhaps extend it for a further period, there would be good grounds for them to do that.”

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