Tax Breaks Lead to Aussies Preferring Big, Dumb Cars

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Many Australians prefer larger vehicles like SUVs because these types often come with generous tax breaks. These tax breaks are often partnered with a marketing strategy that imbibes the notion that Australians need big vehicles as the country is vast.

According to a recently published report by the Australia Institute, “Australians are often told that our collective preference for heavy, inefficient 4WD vehicles reflects our country’s vast distances and harsh outback terrain, a narrative reinforced relentlessly by the way these vehicles are marketed.”

Over the past decade, more than 50 per cent of new vehicles purchased year after year are SUVs. The continuous uptick in SUV purchases is heavily supported by the tax subsidies buyers get.

Marion Terrill, Grattan Institute transport and cities director, noted that the tax rules for businesses and employees subsidised car costs. She added, “When you subsidise the purchase, people probably take some of that benefit as a cash saving, but we also see people who see it as a way to get a more expensive vehicle and, often, more expensive means larger.”

Terrill further points out that two tax incentives motivate consumers to upgrade to SUVS. The first incentive is purchasing larger vehicles intended for business will automatically get an asset write-off since it is utilised for businesses.

The second tax incentive is the fringe benefits tax. This incentive effectively makes cars cheaper as it is designed to tax non monetary forms of income and “the rise of salary sacrificing program for employees that tax cars at a concessional rate.”

However, most Australians live in highly urbanised cities, where most fuel consumption is. These cities have excellent roads, and most are connected by multi-lane highways to which typical Australians do not need ‘gas guzzler’ cars. “If we were to emulate the UK’s purchasing habits, Australian drivers would save some $13 billion on petrol and diesel at the pump, not to mention slash emissions by 17%,” added Emma Elsworthy, contributing writer for Smart Company.

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