How Peter Dutton wants to change the way Aussies drive forever - and what it means for your car

Australians buying a fully-electric car would miss out on tax breaks should Peter Dutton win next months election.

The Opposition Leader has indicated he would scrap Labors generous incentives designed to encourage workers to buy an EV through a novated lease, where the total financing and running costs can be deducted from someones taxable income.

This is done through a salary sacrificing scheme, with employers providing sweeteners in a bid to retain staff in a tight labour market.

Anthony Albaneses Labor government removed the requirement for employers to pay a fringe benefits tax if they provide an EV to a staff member under the $91,387 luxury car tax threshold for fuel efficient vehicles.

This policy has proven popular with 100,000 people taking it up since the policy was introduced in November 2022, with the benefits flowing to richer motorists.

Mr Dutton on Wednesday indicated he would scrap Labors policy - only two days after promising to keep it - arguing that doing so would save taxpayers $3billion over three years. 

The Coalition will: unwind Labors taxpayer-funded and badly designed electric car subsidies, saving upwards of $3billion over the forward estimates and $23billion over the medium term, he said in a media release.

Climate Change and Energy Minister Chris Bowen had estimated Labors fringe benefit tax exemption on EVs would save an employer $9,000 on a $50,000 Chinese-made Tesla Model 3, while an employee would save $4,700 through a salary sacrificing arrangement. 

Australians thinking of buying a fully-electric car would miss out on tax breaks should Peter Dutton win next months election

But The Australian Financial Review estimated the policy was costing $560million a year to exempt one in three drivers from the fringe benefits tax. 

The Productivity Commission in 2022 warned tax breaks for EV purchases would benefit the rich without increasing the number of electric cars on Australian roads. 

With supply the principal constraint to greater EV uptake in Australia, policy efforts to increase the demand for EVs, such as tax concessions and rebates for EV purchases or leases, run the risk of subsidising people who are already in the queue, simply adding more people to the queue, or in the case of tax concessions that are selectively available to some groups, pushing those selected groups to the front of the queue — with little impact on the overall number of EVs on Australian roads relative to what would have otherwise been the case, it said.

The Opposition has already promised to scrap Labors New Vehicle Efficiency Standard, designed to reduce average new car emissions by 59 per cent over four years.

New compliance requirements are being enforced on July 1, which means car makers that sell too many petrol or diesel cars and not enough fully electric or hybrid cars will have to pay penalties, with the costs ultimately passed on to motorists.

Australias top selling car, a Ford Ranger with a diesel engine, would cost $6,150 more compared with $2,720 for a petrol Toyota RAV4, Federal Chamber of Automotive Industries modelling showed.

In another showdown over cars, the Coalition has also vowed to halve fuel excise to 25.4 cents a litre for a year, which would save a Toyota RAV4 driver $14 on their weekly fill-up. 

The Coalitions vow to scrap EV subsidies and vehicle emission reduction standards could make it harder for the Liberal Party to regain teal independent electorates in Sydney and Melbourne that were lost in 2022. 

Anthony Albanese s Labor government removed the requirement for employers to pay a fringe benefits tax if they provide an EV company car to a staff member under the $91,387 luxury car tax threshold for fuel efficient vehicles (he pictured as Opposition Leader in March 2022 with Labor candidate Tania Lawrence)