Fringe Benefit

Impact:

Jobs threatened as fringe benefits tax bites

"This greedy grab from the Government is costing sales today and costing jobs today. Over the last few days of a $1.8 billion hit on motoring ... it's clear this is a serious blow to an industry under pressure."

The executive director of the Australian Automobile Association, Andrew McKellar, welcomed the Coalition's announcement because "new-car sales have been put into a deep freeze".

"We call on the Government now to rethink (the FBT changes).

"There's no harm in admitting there is a mistake ... and determining a different course of action," he said.

At the NLC car leasing firm in South Melbourne, 74 workers - half the company's workforce - cleared their desks yesterday as deliveries of salary-packaged cars instantly dropped from 40 a day to two.

Fringe benefits tax threatens leasing companies

The Government had expected the changes to mostly affect drivers of expensive cars. However industry figures show luxury brands such as BMW, Audi and Mercedes-Benz represent 5 per cent of all novated leasing deals.

Public sector workers account for 80 per cent of contracts, and the average car bought under novated lease arrangements is $34,500.

The Australian Salary Packaging Industry Association said there had already been more than 300 job losses at three car leasing firms and up to 10,000 new-car deliveries had been halted since Wednesday's announcement.

Car and leasing industry bodies will unite in an advertising blitz condemning Mr Rudd for his "ill-conceived" changes to the FBT concessions, which they claim will cost tens of thousands of jobs. The groups willhighlight what they say is vastly inaccurate modelling used by Treasury officials.

In Melbourne, Premier Jay Weatherill put plans to protect Holden to federal Industry Minister Kim Carr. "We think there is a way of remedying the situation," he told reporters