The National Automotive Leasing and Salary Packaging Association (NALSPA) has expressed strong discontent with the recent assessment made by the Productivity Commission regarding the tax incentives for electric vehicles (EVs). In their final report titled “Investing in cheaper, cleaner energy and the net zero transformation,” the Productivity Commission failed to acknowledge the benefits of the fringe benefits tax (FBT) exemption for EVs, according to NALSPA chief executive Rohan Martin.
Martin stated, “It’s disappointing to see the Productivity Commission overlook the benefits of the FBT exemption for electric vehicles. We reject their recommendation outright.” He emphasized that the FBT exemption is a crucial policy that has been effective in promoting EV adoption, aligning with the intentions of the Parliament.
The absence of the FBT exemption could significantly hinder new and second-hand EV sales across Australia. “Without the FBT exemption we would have far fewer new and second-hand EVs on Australian roads,” Martin added. He highlighted that many households are relying on this exemption to make the transition to electric vehicles, with the exemption acting as a decisive factor in their purchasing decisions.
Regional Impact of the FBT Exemption
The FBT exemption is particularly popular in regions such as Werribee in Victoria, Kellyville in New South Wales, and Springfield in Queensland. In these areas, families often face longer commutes and are looking for ways to alleviate financial pressures related to rising living costs.
Research conducted by economic consulting firm Magenta Advisory has revealed that for every $1 spent on the FBT exemption, there are more than $2 in health, environmental, and economic benefits. This finding underscores the exemption’s value not only as a financial incentive but also as a measure contributing to broader societal benefits.
Martin warned that transport could soon become Australia’s largest carbon-emitting sector. “Without making significant progress to decarbonise the private fleet, Australia will be unable to meet its carbon reduction targets,” he stated. The FBT exemption stands as a vital tool in driving the transition to electric vehicles, which is critical for achieving these objectives.
Need for Comprehensive EV Policies
The chief executive further noted that the FBT exemption represents the most effective and nearly the only purchase incentive available in Australia aimed at facilitating the electric vehicle transition. He pointed out that countries with successful EV uptake have integrated both demand-side incentives and supply-side measures, contrary to the Productivity Commission’s assertion that such policies create an overlap.
Despite an increase in electric vehicle adoption, Australia’s progress remains behind that of global leaders in the EV market. Martin argued that maintaining the FBT exemption is essential to sustaining momentum in the transition to electric vehicles until the market can support itself.
The NALSPA’s response highlights the ongoing debate surrounding EV policies in Australia and the potential implications for future regulatory frameworks. As the country seeks to reduce carbon emissions and promote cleaner energy solutions, the effectiveness of existing incentives like the FBT exemption will be critical in shaping the future of electric vehicle adoption.
