Peter Dutton, leader of the Australian opposition, announced on Wednesday that a Coalition government would repeal the fringe benefits tax (FBT) exemption for electric vehicles (EVs). This decision goes back on his comments made Monday, in which he indicated that the Coalition would keep the exemption. Whether the incoming Labor government continues the FBT exemption, which was introduced in 2022, remains to be seen. Since then, it has really taken off—about 90 to 100,000 customers are currently benefiting from it.
The FBT exemption has been a huge hit with Aussie EV customers. National Automotive Leasing and Salary Packaging Association (NALSPA) data demonstrate the overwhelmingly positive impact. The scheme has been hugely successful in driving EV uptake across Australia. Rohan Martin, chief executive of NALSPA, underscored that repeal would place more burdensome costs on consumers. He estimated that a worker looking to purchase a vehicle priced around $45,000 would incur an extra $3,500 annually without the exemption.
The Coalition’s own press release at the time called the FBT exemption “wasteful spending.” In short, they claimed it represents a fundamental departure from their fiscal policy. Dutton followed up on his controversial comments last month to further explain his position. He explained that they were targeting Labor’s proposed vehicle emissions standards, dubbed the “ute tax,” not the FBT exemption.
In a very tense press conference in Hobart on Thursday, Dutton was forced on the back foot over this clear double standard. Julie Delvecchio, a spokesperson for the advocacy group ChargEVC, told the Star she was disappointed by the Coalition’s decision.
“If the Coalition is indeed scrapping the FBT exemption, after the opposition leader just days ago indicated he didn’t have any proposals to change it, then we are extremely disappointed and confused by this backflip.” – Julie Delvecchio
Delvecchio explained the far-reaching impacts of this decision. Australians right now are struggling with cost-of living pressures.
“If the Coalition wants to make cars cheaper and driving cheaper during a cost-of-living crisis, it wouldn’t be removing this discount for Australians.” – Julie Delvecchio
Richard Denniss, executive director of The Australia Institute, eviscerated Dutton’s opposition to EVs. Read more about his economic logic explanation of why subsidies and taxes should reflect consumer preferences.
“Basic economics says to tax things you want less of and subsidise things you want more of, yet Peter Dutton seems to want less electric vehicles and more American-style utes on our roads.” – Richard Denniss
Dutton’s comments on Monday have led to significant confusion among stakeholders regarding the Coalition’s true intentions toward electric vehicle policies. The FBT exemption for EVs is a huge financial incentive in itself, valued at about $3 billion. Its repeal would significantly set back Australia’s efforts to shift toward more sustainable transportation solutions.
Rohan Martin, from the ACT’s Submission, emphasised how crucial the current policy is in helping out ordinary Australians. As he explained, it’s workers in outer-metro suburbs who get to use this tax break the most.
“It’s average, everyday working Australians living in outer metropolitan suburbs that are the main beneficiaries of this existing policy and are the main users of this policy.” – Rohan Martin
As discussions around electric vehicle policy continue, the backlash from various stakeholders highlights the division within Australian politics over how best to approach sustainability and economic growth. The electric vehicle adoption future in Australia is unclear. Other voters and advocacy groups, both in the Coalition and without, are looking forward to seeing what the Coalition will take its policy in.
