CheckMate March 14, 2024
This week, CheckMate returns for 2024 to debunk suggestions that the government’s proposed new fuel efficiency standards amount to a tax, and bring you up to date with the latest findings from RMIT ABC Fact Check.
No, Labor is not taxing the family car
More than a month on from Labor’s unveiling of the details of its proposed new vehicle efficiency standard, the government’s opponents continue to claim the scheme amounts to a new tax.
In a media release posted to the Liberal Party’s website on February 19, for example, shadow ministers Bridget McKenzie and Ted O’Brien suggested “Labor’s family car tax will put thousands of dollars on the price of new cars Australians love to drive”.
In another instance, a joint doorstop interview conducted at a Toyota dealership in Western Australia on March 6 saw Opposition Leader Peter Dutton, together with shadow ministers Angus Taylor and Michaelia Cash, label the fuel efficiency standards a “tax” a combined total of 15 times.
“People just can’t afford in their budgets to find another fourteen- or eighteen-thousand dollars under Mr Albanese’s new ute tax and new family car tax,” Mr Dutton said during the doorstop.
Elsewhere, the policy has been labelled a “ute tax” by conservative lobby group Advance and One Nation senator Malcolm Roberts.
But as experts told Fact Check, the government’s proposal does not amount to a new tax.
Under the three options for a fuel efficiency standard outlined by Labor in early February, car manufacturers would be required to meet limits on fleet-wide carbon emissions each year, or face financial penalties.
Automakers that keep their emissions below the ceiling would be awarded credits, which could then be sold to competing manufacturers that miss the targets.
The proposal treats utes, large SUVs and four-wheel drives differently than it does smaller passenger vehicles, labelling the former “light commercial vehicles” and allowing for a higher emissions limit on such cars. Most of Australia’s top-selling cars in 2023 would fall into this category.
In a case study published by the ABC last month, one popular car, the Isuzu D-MAX ute, would not meet the government’s emissions targets by 2026 under Labor’s preferred model for emissions standards, resulting in a financial penalty for the manufacturer.
“The idea is that Isuzu, or whichever car maker, is incentivised to develop more efficient technology and sell more efficient vehicles to balance out their more polluting cars and avoid a penalty,” the ABC reported.
Paul Burke, the head of the Arndt-Corden Department of Economics at the Australian National University, rejected the notion that a new vehicle efficiency standard was a tax.
“A tax is a mandatory charge that collects revenue for the government,” he told Fact Check in an email. “This is not the case here — it is a scheme that requires average efficiency standards are met by suppliers of new vehicles, with suppliers able to trade credits to meet compliance requirements.”
Professor Burke explained that while firms could be made to pay a penalty instead of meeting compliance requirements, the scheme was not a tax.
“An analogy is rules requiring passengers to wear a seatbelt — there is a penalty for non-compliance, but the requirement to wear a seatbelt is not a tax.”
John Quiggin, a professor of economics at the University of Queensland, said in an email: “It is not accurate to describe the standard as a tax, since no revenue is raised.
“The design of the scheme is similar in principle to that of the Renewable Energy Target, which was first introduced by the Howard government.”
Michael Dirkis, a professor of taxation law at the University of Sydney, noted that a tax was defined in the Concise Oxford Dictionary as “a contribution levied on persons, property or business for the support of government”.
“There is no new tax being levied on utes,” he told Fact Check. “They can continue to be imported with the existing excises and GST still applicable.
“All that has happened is that manufacturers importing cars will have a cap on the emissions their suite of cars can produce. Failure to meet that cap means they will have to buy offset permits.”
There was also no guarantee that consumer prices would be affected, Professor Dirkis added.
Indeed, despite Coalition claims of price increases for particular makes and models (including Mr Taylor’s suggestion that the proposed standards would add $14,500 to the price of a Toyota HiLux), the industry modelling on which such claims would appear to be based does not relate to consumer prices.
A spokesman for the Federal Chamber of Automotive Industries told Fact Check that its modelling looked at scenarios “on penalties and credits that may apply to [car] brands” under the proposed standards.
“This is not a forecast on price impacts,” the spokesman said via email. “Price and how penalties/credits are carried forward will be a matter for each brand and how they are impacted under the scheme.”
Extracted in full from: https://www.abc.net.au/news/2024-03-15/fact-check-vehicle-missions-standard-ute-family-car-tax/103587622
