Fringe benefits tax and the company car : aligning the tax with environmental policy

Abstract

Increasingly, environmental taxes have been seen as a legitimate means to address environmental issues, specifically global warming, but opportunities also exist to reform current tax frameworks to align them more closely with environmental objectives. The current regime for the taxation of the company car as a fringe benefit is a clear target for such reform. This article sets out in some detail the operation of the fringe benefits tax with respect to the company car and then identifies the numerous calls for the reform of this regime, coming from both tax and environmental perspectives. The article then describes recent reform initiatives in the United Kingdom and Canada which have incorporated reductions in greenhouse gas emissions as an objective of the taxation regime. The article concludes with suggestions of a way forward in the reform of the Australian regime.