To discourage the production and purchase of fuel-inefficient vehicles, the United States have a gas-guzzler
tax on many large luxury cars. To help mitigate the effects of climate change, the European Union recently adopted a proposal to limit CO2 emissions from cars, and Holland currently impose a tax on large in-efficient vehicle sales, hitting some buyers with an extra AU$15,000. Australia could be the only major developed country that does not have a tax on the purchase of large cars.

Some legislation in Australia actually contributes to the effects of climate change, such as the Fringe Benefits Tax (FBT) for personal use of company cars. A total of $1.5 billion dollars was used to subsidise use of company cars last financial year and this figure is set to increase to $2 billion next financial year. The FBT encourages those who benefit from this tax to drive their cars more, as findings from a Latrobe University investigation suggest: ‘under the current FBT regime if one travels a mere 3700km to get to the ’15,000 km band’ for a tax break, the extra petrol cost is $525 but the FBT savings is $1960. The system overwhelmingly rewards higher mileage to the cost of the environment.’ A reduction in the average car’s mileage of 3,700 km per year would achieve a reduction of one tonne of CO2, another finding highlighted in the study.  

It was also found that up to 80 percent of surveyed drivers who benefit from the FBT lived within 15 kilometres of the office, suggesting an estimated annual mileage for travel to work and back of 7,200 kilometres. However, 80 percent of those surveyed showed annual mileage of more than 15,000 kilometres. The Australian Conservation Foundation (ACF) recently called for the abolishment of the FBT on company cars labelling it ‘environmentally destructive’. “Company cars are responsible for about 18 percent of the greenhouse gas emissions from passenger vehicles. That’s about 7.9 million tonnes of pollution,” Don Henry Executive Director, ACF.

Other ‘environmentally destructive’ legislation: Despite domestic air travel being up to five times as energy intensive as other forms of intercity transport, aviation fuels are taxed  at a mere three cents per litre, while petrol attracts an excise of thirty-eight cents per litre. A total of $3.5 billion in revenue costs go to subsidising use of diesel fuelled vehicles, despite the fact that per litre, diesel releases more greenhouse gases than petrol.

Also from the AFR article:

References

• Easdown, R, ‘There’s a green car in your future,’ The Weekend Australian Financial Review, April 24 – 27 2008
• ‘Call to abolish 'senseless' incentives for company car use,’ ECO Magazine, Apr – May 2008, CSIRO Publishing
• Davidson, K, ‘Fringe benefit exacerbates greenhouse gas,’ The Age Oct 15 2007
• Maiden, S, ‘Scrap company car tax break: ACF,’ The Australian, April 9 2008