abott & hockey in talks, page-21

These clowns have no idea - but nice to see them looking after their mates at the expense of everyone else

From Herald Sun



THE Rudd Government is considering a partial backdown on the controversial changes to Fringe Benefits Tax rules by offering government workers a $3000 rebate on locally made cars.



But it is an offer few government employees would be likely to take-up because the rebate only covers less than one-quarter of the increased cost of FBT on personal use of company cars.



While the Government has claimed it will not make any changes to the sudden overhaul of the tax rules on company cars, announced on July 16 and blamed for the loss of 300 jobs with a further 3000 under threat, it has been privately canvassing ideas with the car industry.



The offices of Treasurer Chris Bowen and Industry Minister Kim Carr repeated to News Corp Australia as recently as yesterday that there would be no changes or concessions to the new FBT rules.



However, car industry sources have told News Corp Australia the Government's preferred proposal is a rebate of $3000 to government-employee purchasers of locally-made cars.



"They're getting themselves in an absolute tangle on this FBT issue," said Andrew McKellar, the executive director of the Australian Automobile Association.



"A rebate would not be a solution at all. No one in their right mind would take it up. The fastest way to fix this mess is to announce an immediate reversal of the changes. The sooner that happens, the sooner the industry can start to recover."



Changes to Fringe Benefits Tax rules have slammed the brakes on salary-packaged car deals and novated leases - about one-third of all new vehicles sold - because they effectively double the tax on personal use.



Figures from fleet services provider FleetCEO show the FBT on a $40,000 car that travels 25,000km a year was $7680 under the old system (which assumed 80 per cent of a leased vehicle's use was for business and 20 per cent was personal). Under the new rules, the FBT would shift to 100 per cent, which in this example sees the FBT increase to $14,209 each year.



An industry source said the Government's proposed $3000 rebate would "evaporate" in the first three months.



Figures released by the Federal Chamber of Automotive Industries yesterday formally forecast that the new FBT rules will hit locally-made cars hardest and wipe $3.4 billion in new-car sales over a full year.



The industry expects a 10 per cent downturn in new-car sales overall, but locally made cars are forecast to take a 20 per cent sales dive over 12 months under the new rules.



The car industry is concerned the rebate to government buyers of locally made cars will be ineffective and few buyers will take up the offer.



Last year government departments purchased only 4 per cent of all passenger cars sold in Australia (23,992 of 576,855) and 3.7 per cent of all SUVs (11,326 of 305,825), figures from the FCAI show.



However government buyers account for a greater percentage of locally made vehicles and up to 80 per cent of novated lease and salary packaging deals.



The Government's rebate proposal excludes private individuals and company employees who want to take out a novated lease on a locally made car