The Greens have reached a deal to reduce the costs of electric batteries, but not fossil hybrids

Federal government legislation proposing to exempt a range of low-emission vehicles from benefits tax looks set to prioritize battery-electric vehicles, after a deal was struck between Labour, the Greens and the Independent Senator David Pocock.

Greens leader Adam Bandt said his party had reached an agreement to make changes to the Treasury Laws Amendment Bill 2022 (Electric Car Rebate) to increase support for electric vehicles in zero emissions and to limit the financing of gasoline-powered hybrids.

A formal vote on the amended bill is expected to take place either later Tuesday or later this week. Bandt says the government needs votes from Greens in the Senate to pass the bill.

In its original form, the bill proposes tax exemptions for battery electric, hydrogen fuel cell and plug-in hybrid electric cars worth less than $84,916 and made available for private use in an employee or an associate of the employee by his employer.

A benefit is something extra that an employee receives from their employer on top of their regular salary, and the employer is responsible for covering the tax on these additional benefits each year.

Removing the tax would mean savings on an electric vehicle worth around $50,000 – which Treasurer Jim Chalmers has acknowledged is scarce in Australia, at least for now – until $9,000 per year per car for businesses.

This could significantly boost electric vehicle sales – a recent survey found around 40% of small and medium-sized businesses would buy an electric vehicle within a year if the Electric Vehicle Reduction Bill were passed.

Another fossil fuel subsidy?

The Treasury Laws Amendment Bill 2022 (Electric Car Rebates) was introduced in Parliament at the end of July but was held back by the Greens and Pocock, who argue that only zero-emission vehicles should be exempt from the tax .

The Greens and Pocock argue that including plug-in hybrids in the policy amounts to another fossil fuel subsidy, given that these vehicles still use gasoline.

“Australian governments are already spending $11.6 billion a year of public money to subsidize the burning of coal, oil and gas,” the Greens said in their submission to the Senate Economics Legislation Committee on the legislation.

“The Australian Greens believe that public money should not subsidize fossil fuels, and instead the money should be used to accelerate the uptake of electric vehicles.”

The Greens and the Teals flex their parliamentary muscle

In a statement on Tuesday, Bandt said that after weeks of negotiations, the Albanian government had agreed to support changes to the bill that will limit support for fossil fuel plug-in hybrids.

According to Bandt, the changes agreed to include the plug-in hybrid support “kitty” by April 2025 and to remove PHEVs from the federal government’s fleet procurement policy, except in “exceptional circumstances.”

Bandt says the Australian Taxation Office should also issue guidance on when household charging technology can be included in FBT-exempt vehicle packages – another of the Greens’ recommended changes to the bill.

“The Greens have accelerated electric vehicles,” Bandt said.

“By limiting donations to petrol cars and accelerating support for electric vehicles, the Greens in the balance of power have pushed the government to do more and faster on the climate.

“The government fleet will switch to electric, and when these cars are sold used, it will help reduce the cost of electric vehicles for ordinary people.”

Senator Pocock has yet to make an official statement on the deal ahead of the vote.

According to legal blog Lex, the Senate Economic Legislation Committee reported overall support for the bill, as well as calls for its rapid passage given its potential role in making electric vehicles more affordable and boosting their adoption.

In a dissenting report, however, Lex reports that Coalition senators said the bill should only be considered following the findings of the federal government’s investigation into the National Electric Vehicle Strategy.

Coalition senators also reportedly said that the $205 million in forward-looking tax cuts from forecast estimates should be redeployed to the best method to increase EV adoption, which should include EV infrastructure. .

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