It doesn't matter what 'level it's at". Read a bit more widely than you obviously have and you'll find predictions of much that has clearly not been considered by the government in their rush to find some easy money to bolster the budget. I don't have time right now to find it online but there's a pretty clear account in "The Weekend Australian" by Robert Gottliebsen titled "How we can fix the FBT farce".
And from another article on the same subject we have this:
This is precisely the sort of trademark Labor lack of thinking something through before rushing ahead with it.
For the record, I'm not at all opposed to tax perks being withdrawn. They all keep taxes higher for everyone to the benefit of fewer.
from Tristan Edis in Business spectator today
What has the government done? It has removed the ability for people to use the leasing of a car as an income tax deduction (and also avoiding GST on petrol) by default (known as the ‘statutory method’), without providing any evidence that the car is used for work purposes. Instead people will have to provide evidence via a log book that demonstrates that the car is a genuine working expense.
The statutory method of calculating fringe benefits tax on cars was originally introduced as an alternative to the administrative pain of keeping a log book. Instead of producing a log book, the tax department would assume a certain proportion of work use for a car based on how many kilometres the car travelled in a year.
Leasing and salary packaging companies sprung up to exploit the loop hole, as did fuel card companies.
The end of year cross country trip to clock up the kilometres on the car over key statutory method thresholds became something of folklore in offices offering salary packaging to employees. One would also regularly hear the anecdote of people lending their car to friends and families to do a return trip from Melbourne to Sydney. And then there was the March scramble to get the kilometres up to the threshold you’d nominated to the tax department before the FBT year ended.
We could then leave it up to these nurses and not-for-profit employees whether they want to use the extra cash to pay for a new car and petrol if that’s what they’d like. But no doubt many would prefer to spend this money on something else which would make them happier. And we’d free them and their employer from the administrative hassle and cost of dealing with salary packaging.
In addition people who are very well paid will pay a fairer share of their tax obligations.
Yes some people will lose jobs in salary packaging and leasing finance companies and in car dealerships. No doubt many of them are lovely people whose employment we should be concerned about. But the economy will be undoubtedly better off with these people employed in other careers providing services that people would prefer to a new leased car.
What about the Australian car manufacturing industry I hear you say. If you think they need more subsidies, then wouldn’t you want taxpayers’ money targeted at these locally made cars rather than dispersed across BMWs, Mercedes and Hondas as well?
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As I see it there are several industries reliant on government tax relief or handouts. Clearly the car industry is one and by changing the tax rules has severely hurt the industry. Child care is another industry which would collapse if government support were to be suddenly pulled. I understand that Therese Rein (Rudd's wife) has built her business on government handouts - what would have happened to her cash cow if those handouts had been scrapped?
Labor's spin that people just need to keep a log book isn't going to pick car sales back up. So now labor are either going to have to pay more money to the industry to keep them afloat or pay for more unemployed people. Real clever...not!
IIRC it was Howard who introduced the Child care rebates? personally i see them as providing a very poor return on the money spent.
Federal Govts of all stripes have propped up the car industry for decades. Why we need to provide further assistance to them I don't know. We'd be better off taking foreign subsidised cars and letting overseas tax payers help buy us a new car.
Why is the Government now responsible for the level of car sales??
It's a bit like saying cutting back on middle class welfare will cause retail sales to be lower and higher unemployment, so we can't cut them.