While it’s appropriate governments incentivise the shift from petrol and diesel cars to cleaner transport, FBT exemptions for personal use of motor vehicles are the very worst way of doing so. FBT tax breaks mean taxpayers meet up to a third of all purchase and operating costs, and all GST, for personal vehicles, with the taxpayer subsidy greatest for those on the highest incomes.
But that’s only the start. It also means for every additional kilometre of personal car travel by those fortunate souls in the top tax bracket, and built into their salary package, 52 cents in every dollar is being coughed up by the Australian taxpayer rather than the driver. We’re not aware of any other nation rewarding people in this way for adding to traffic.
Nor have FBT tax breaks ever been on offer for other forms of electric transport like trains, trams, electric buses or e-bikes, despite that fact these other modes of transport avoid traffic congestion almost entirely.
Incentives for EVs could be better provided through more generous discounts on annual rego, which have the advantage of not rewarding people for additional driving.
Tony Morton, President, Public Transport Users Association
Letter to The Age, published 18 June 2025