Kim Carr. Photo: Andrew Meares
The Rudd government could change its car plan to compensate Australian manufacturers if its reform of the fringe benefits tax leads to ''unintended consequences'', says Industry Minister Kim Carr.
As Treasurer Chris Bowen stood firm, and car leasing companies said they would start laying off staff on Friday, Senator Carr met with car manufacturers and finance companies to hear their fears about the tax change.
Leasing firms say the tax could wipe out the novated lease business, which now sees a third of new cars sold to employees who get a tax break for buying through salary sacrifice.
Novated lease company nlc announced 74 redundancies from its 143-strong workforce on Thursday.
Holden and Toyota fear the change will cause a significant impact on their battered sales. Traditionally, government and business users bought three-quarters of all new Holdens and Falcons, although most business purchases are now imports.
The car industry is considering an advertising campaign to protest against the changes, according to reports on Sky News on Friday.
Senator Carr said he was listening to the industry's concerns, and the government would ''go about implementing this policy change in a sensible and considered way''.
But he said the tax change was justified, and had gone through the cabinet process. If the industry suffered ''unintended consequences'', he said, the government would consider that in the context of carmakers' calls for changes to the New Car Plan.
Opposition Leader Tony Abbott on Friday said in a statement that the Coalition would not support the changes and if elected would no proceed with them after earlier equivocating on the issue.
Treasury estimates the tax break costs revenue of $800 million a year, which is almost twice the cost of the car plan. But the car plan is set to taper off, and Holden is pushing Labor and the Coalition to offer increased support to keep it manufacturing after 2016.
''I have had numerous discussions with the automotive manufacturing industry about our proposals and will continue talking with them,'' Senator Carr said.
''The purpose is to give companies the opportunity to talk through with us their view regarding the impact of these changes. Clearly, we have our own view of this, but we want to hear industry's views.''
A war of statistics heated up between government and industry over the change. Leasing firms said most of their clients earned less than $100,000 a year, while Mr Bowen said two-thirds earned more than $100,000.
''Treasury analysis indicates the changes affect around one in six employees earning over $150,000 a year, compared to around one in 25 employees earning between $60,000 and $100,000 a year,'' Mr Bowen said.
He likened the outcry to the 1985 campaign by restaurateurs against the introduction of the fringe benefits tax, which they claimed would shut down their business. In fact, the tax barely registered on the industry's rapid growth.