Article: Tax benefits choking city roads

[ozbob]

From the ABC News click here!

Tax benefits choking city roads

Tax benefits choking city roads

By transport reporter Kylie Simmonds


A transport lobby group says drivers who gain tax benefits by having a car included in their salary package are choking Australia's roads.

The Tourism and Transport Forum (TTF) says traffic congestion will cost Australia nearly $13 billion this year.

It says while major cities choke, the Federal Government is encouraging people to drive by offering tax concessions for people who get cars as part of their salary package.

The more people drive, the bigger the tax benefit.

TTF's Kary Peterson says it does not make sense for the Government to promote car use while claiming to be conscious of climate change.

"What we need is a level playing field between people commuting to work by public transport, who get little or no tax breaks, with those who are driving into work and reaping the benefits of FBT benefits or exemptions," he said.

"There's no need to wait until next year's tax summit. What we want is it to be phased out in the next budget."

Mr Peterson says congestion would ease if the tax concessions were scrapped.

"With 2 million people using this at the moment it would make a massive difference," he said.

The scheme was introduced more than 20 years ago to help the struggling local car manufacturing industry.

It costs the government nearly $2 billion a year, which the TTF says would be better spent investing in more public transport.

right on TTF, great move.

TTF --> http://www.ttf.org.au/Default.aspx

[ozbob]

Add in the costs of road trauma, Australian transport policy planners have lost the plot!

Around $55 billion dollars in direct costs alone ...  tragic!!

[ozbob]

I just heard on ABC Radio News the Hon Rachel Nolan MP Minister for Transport supporting this call by the TTF and public transport generally.

[ozbob]

http://www.ttf.org.au/DisplayFile.aspx?FileID=990

FOR IMMEDIATE RELEASE Monday November 15, 2010

MAJOR RETHINK OF FBT NEEDED TO COMBAT CONGESTION

Tax concessions for drivers who salary package their cars are a major contributor to road congestion in Australia and a disincentive to use public transport, according to peak national body, Tourism & Transport Forum (TTF).

Releasing TTF's latest policy position paper – Reforming Fringe Benefits Tax ‐ TTF Manager, Transport Kary Petersen said car fringe benefits, introduced in 1986 to boost a struggling domestic car market, were outdated and in need of urgent reform.

"The time has come get rid of FBT exemptions for salary packaged cars," Mr Petersen said.

"This scheme has surpassed its use‐by‐date to become one of the most significant inefficiencies in our tax system, costing the federal government around $1.7 billion a year.

"Every year more than two million vehicles are subject to FBT claims, with most falling under 'the further you drive, the more you benefit' category.

"Having a system in place that encourages car dependency is unacceptable today, with roads in our major capital cities choking under the burden of congestion and productivity being hampered.

"Removing car fringe benefits would not only remove the incentive to drive, but unlock a significant revenue stream for government to invest in public transport infrastructure.

"If the government is serious about delivering a sustainable Australia, an urgent rethink of our tax regime is needed."

Mr Petersen said while the Henry tax review was critical of car fringe benefits, it didn't go far enough to address the current inequities between private car and public transport use.

"The current system of car fringe benefits rewards drivers, but leaves public transport commuters at a disadvantage," he said.

"Employers that do offer salary‐packaged public transport expenses are taxed at a rate of 46.5 per cent – almost seven times the rate of a private motorist driving over 40,000 kilometres.

"We need to level the playing field between people commuting to work via public transport, who get little or no tax breaks, with those drivers reaping the benefits of FBT exemptions and reductions.

"There is no need to wait until next year's tax summit to act. Common sense demands this tax distortion be phased out in the next budget."

<ENDS>

[WTN]

I read this news article this morning and was quite shocked. TTF have nailed how wrong this "subsidy" went, although they should include road trauma costs as well as congestion and climate change. Encouraging people to drive more at the expense of the taxpayer, environment and community doesn't make sense!

[ozbob]

Indeed, the TTF has nailed this.  We don't always agree with the TTF but on this excellent effort.

Slowly but surely, the wheels are turning ...