Carbon tax: Play the right game, says Mercedes

MERCEDES-Benz has accused the federal government of changing the rules mid-game in its rush to fill a $3.8 billion black hole created by abandoning the fixed-price carbon tax.

The changes to fringe benefits tax laws, announced yesterday as part of a move to a floating price for carbon dioxide emissions, will slug owners who lease their cars $1.8 billion, the government has announced.

The German luxury car-maker’s senior manager of corporate communications, David McCarthy, said the changes to fringe benefits tax laws lacked clarity and were introduced without any industry consultation.

“Imagine the AFL Grand Final at half-time,” Mr McCarthy said. “The umpires come on the ground and say 'OK guys, we're now playing netball'.

“Basically you're going from a system where there was certainty – people could make decisions on that – to the situation where you now have uncertainty,” he said.

The federal government has announced it would remove the statutory formula method for both salary-sacrificed and employer-provided car fringe benefits for contracts signed, or “materially varied”, after July 16, 2013.

The statutory method assumed 20 percent of a leased car’s use was private, allowing the owner to gain a tax concession if no logbook was used, regardless of how much personal use the vehicle was used for.

Mr McCarthy said corporate leases accounted for about 10 per cent of Mercedes-Benz’s business in Australia.

He said the government’s insistence that owners could use technology to keep track of private versus business use was flawed.

“I'd suggest they've never kept a logbook,” Mr McCarthy said.

“Whilst there may be these apps out there, this is going to impose a level of record-keeping and compliance that is very, very difficult.

“And if you get it wrong, what's going to happen is that you're going to be paying fringe benefits tax on the total use.” Mr McCarthy said the government’s revision to car-related fringe benefits tax was first suggested in the Henry tax review – a wide-reaching look at how Australia could reform its taxation laws that was commissioned by the Rudd government in 2008 – along with a separate recommendation to abolish the luxury car tax.

“They've decided effectively 'oh, this (removing the FBT statutory formula method) is a good idea', but why didn't you do the other (remove the luxury car tax as recommended by the Henry tax review) as well?” he said.

“But there's been zero consultation. We have to plan as does every other importer or manufacturer. We have to plan sometimes 10 years ahead,” he said.

“It's deja-vu, it's the same as the increase in the luxury car tax – no understanding of the consequences, scant detail, no consultation – it's like Groundhog Day.

“What they're doing here is changing the ball game entirely,” Mr McCarthy said.

“Have they thought through the situation? I would suggest no. Do they understand the issues? No. Do they understand the implications? No.

“The government say they want certainty. People want clear policies. What happened here?”