Tax benefits on company cars is encouraging environmentally-damaging car use, an environmental group says.
Treasury tax expenditure figures have projected that by 2009-10 more than $2 billion per year will be spent subsidising the use of company cars.
This is nearly twice as much as was previously predicted, the Australian Conservation Foundation (ACF) said.
Tax concessions for the private use of company cars actually increased the kilometres drivers clocked up and contributed to increased greenhouse-gas pollution and urban traffic congestion, the ACF said.
And it's not just cars owners who are benefiting from tax breaks.
For the 2008-09 year, the estimated value of tax incentives for use of aviation fuel has gone up from $830 million to $900 million and the value of tax incentives for the production of condensate by petroleum and gas companies has gone from $250 million to $320 million.
"These tax breaks are economically senseless, reward environmentally destructive behaviour and increase taxes that the rest of us have to pay," ACF strategies director Charles Berger said.
"There are much better uses for $2 billion than to hand it out to affluent corporate executives as an incentive to buy cars and drive them as much as possible to get the maximum tax benefit."
He says the new Rudd government should dismantle this "fiscally irresponsibly, environmentally destructive" fringe benefits tax break for company cars in its first budget.
