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Comment by rippercushions | Hacker News Reader

Australia also has a remarkable tax incentive that lets you buy EVs basically tax free (fringe benefits tax exemption for novated leases, in bureaucratese). Basically, instead of paying $70k for a Tesla post-tax, you can get it deducted directly from your paycheck for around $45k pretax. The exact math depends on your income, and perversely enough the subsidy increases the more you earn and the higher your taxes, but it has definitely been effective at turbocharging EV sales in a country that was otherwise a comparative laggard (only 3.8% of new sales in 2022, before the incentive kicked in).

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Imagine if all those public money could be spent on improving public transportation instead of in some rich pockets

Where is this fairy country Australia? Living at the western fringe of Greater Melbourne, any charging infrastructure is invisible here, I'm not sure it exists. And $45k or $70k alike both look incredibly expensive to me, I would never find a reason to justify such a purchase. Perhaps going to consider a second-hand deal when the price is below $10k and age is over 10 years, provided the longevity of the battery would look good for the next 10 years and there are "wagon" options on the market.

Honestly cannot understand who are those subsidies for. Recently I witnessed a few times a scene on a parking lot, which appeared to me as a group of overjoyed young people congratulating their happy mate about acquisition of a new ride (invariably a fancy Shelby Mustang or a mean-looking BMW, and invariably on their Ps) - you know, sniffing under the car, patting (the car and the lucky owner) on all surfaces, marveling from all distances. Laughing and selfying. The average age within all those groups, to my judgement, was around 16yo, so I highly doubt they could make full use of Salary Sacrifice incentive. And families like mine will always consider paying for a new car a complete waste. Going "carless" is also absolutely not an option, so if we must spend we're looking for maximum value and minimum outlay.

> Where is this fairy country Australia? Living at the western fringe of Greater Melbourne, any charging infrastructure is invisible here, I'm not sure it exists.

There's plenty of options, check out PlugShare. Most people however charge at home - power into a garage or carport is pretty commonplace, and no special equipment is required.

> And $45k or $70k alike both look incredibly expensive to me, I would never find a reason to justify such a purchase.

$45k sounds high until you do the maths on petrol and servicing savings per annum. Depending on your lifestyle, distance travelled per year, access to free charging (solar, shops, etc) you can save $30-60k in fuel over the 10 years of warranty the battery pack has.

> And families like mine will always consider paying for a new car a complete waste. Going "carless" is also absolutely not an option, so if we must spend we're looking for maximum value and minimum outlay.

It's worth sitting down and doing the maths. You might be surprised the value proposition once you do it.

In Austria we have much the same but luxury car limit has been 40k since like 2 decades. Which is an utter joke in 2023 because you can buy like 3 EVs under 40k list price.

We do? Isn't this only a thing for corporate vehicles?

Yes sorry but the company can very favorably provide the vehicle to employees without the employee getting taxed on the benefit at all. If you look at the new car market at relevant price points most potential buyers (self employed and people with generous salaries) have access to the scheme.

> the subsidy increases the more you earn and the higher your taxes

What's the name of this law called that does this? Seems like quite the oversight.

It is Salary Sacrifice, where an employer agrees to swap salary for some non-cash reward. Employee gets less cash and the benefit (eg. a car). Employer pays Fringe Benefits tax on the benefit, employee doesn't pay tax on the salary they sacrificed. The trick is that there is no fringe benefits tax on electric cars, in one of the few ways Australia is actually promoting them.

https://www.ato.gov.au/Business/Fringe-benefits-tax/Salary-s...

So people in the highest tax bracket can get cheap luxury cars, and everyone else left out in the cold while we wait for government to incentivize affordable electric vehicles on the market. You can still count on one hand the number non-luxury electric car models on the market (<$70,000 AUD). Cheapest is still $50,000 AUD ($33k USD)

For people living in cities/towns, how much of an option is it to go car-less? Is it more like, say, Dutch cities, or more like in the US?

Anyway, whenever I hear talk of promoting EVs without mass transit being mentioned together with it, my instinct is to assume it's some sort of an upwards-transfer-of-wealth scheme in which richer people get subsidized.

It's not quite as extreme as the US, in the city center you can manage okay without, but it's mostly not an option.

You can manage fantastically, not merely okay, without a car in Sydney and Melbourne’s city and inner suburbs. Most people I knew who lived in those areas did not own a car and were better for it.

Fair, I lived in East Melbourne for a couple of years and having a car was entirely unnecessary.

You're right, and I hate it for that reason.

However there are not many other levers to be pulled, and any price reduction in what are expensive vehicles will benefit the wealthy.

The obvious alternative (make ice vehicles more expensive) will actively hurt the poorer car owners more.

I honestly don't see obvious better ways to drive ev uptake

We need more and cheaper models of EV vehicles on the market. Like there are in other countries. Without this you are correct, as the only cars on the market are only affordable by the wealthy.

Over here we are being told that something simple like stricter fuel emissions standards would cause manufacturers to release many more models of EV cars, and that would include more affordable models as well as driving down the costs (we are paying $36,000 USD for a Nissan Leaf, which is only $28,000 USD in USA and 'as low as $20,000' on their web site). Manufacturers still have a lot of capacity for producing cars they are unable to sell in many places, and Australia is a dumping ground. And manufacturers say it will remain so without incentives. Or perhaps if they are forced by new manufacturers such as ACE or BYD, if they are accepted by the market.

You can increase the tax on the cars wealthy people drive like in the UK we have an annual road tax that varies from not much on a 1L economy car and is like £500 a year on large engined vehicles.

It's not a law, it's math. Anything that comes out of pretax income is a bigger incentive (dollar-wise) for those who have a higher tax rate.

math is law! :)

> What's the name of this law

It's a consequence of progressive tax rates.

Last year in the United States, for example, no matter how large your salary was, a single person's income tax rate for the first $10,000 of salary you earned was 10%.

The portion of your salary above that $10,000 is taxed at a higher rate, and as you cross salary amount thresholds (called tax brackets) the tax rate keeps getting increasing for the amount above that threshold.

By the time you get up above the $540,000, the portion of your salary above that $540,000 is taxed at the maximum 37% rate.

So if you purchase a big ticket item that is deducted from your salary before they figure out how much taxes you owe, high earners can save quite a bit.

In the US, this is accurate for other clean energy incentives, but EVs get a $7500 tax credit rather than a tax deduction so the benefit doesn’t depend on tax rate.

The credit is not available for incomes over $150k (single) or $300k (married filing jointly), but the credit is also non-refundable, which means it can only reduce your tax to zero. If your total tax is < $7500, you don’t get the rest back as a refund. This means that, for example, married couples earning less than ~$95k don’t get the full credit.

To play devil's advocate: this puts higher-quality EVs within reach for more people. Some might go all out on a very expensive EV, but presumably most will just want bang for their buck. In turn, plenty of these vehicles will enter the second hand market, starting from a few years down the line.

Back to reality: such effects smell like trickle down economics to me. They may work, provided the rules stay the same. Around here, the govt eradicated the subsidies on hybrids right before the first generation lease hybrids were about to enter 2nd hand market. So we collectively sponsored a bunch of well-off consultants getting fancy cars that were, after the leases ended, all exported :s.

It sounds good in theory. Poor people don't buy new cars, they buy used cars. It's hard to lower the price of used cars by subsidizing them since they are in fixed supply. If you subsidize them the demand increases. The increased demand raises the price, neutering the subsidy.

The way to lower the price of used cars is to subsidize new cars and then waiting 3-10 years. But that doesn't work well either, because pricing is global, and because the demand split for EV/ICE changes every year.

> Back to reality: such effects smell like trickle down economics to me

These feel like scaling down costs rather than trickle down economics. Almost every home good or vehicle, electronic devices, computer parts were super expensive when they came out. The initial presumably rich people fund the factories that eventually mass produced them by buying these super expensive goods which lowered the prices to where the middle class can afford them. It also allows companies to iron out initial issues with production and usability before mass producing items.

Government subsidies and incentives drive this process faster and make it more likely to not die out by trying to ensure that the companies can survive when upfront costs are very high before the first few goods can even ship to the few people that can afford them. Trickle down economics is something quite different.

It's not really a subsidy, just you don't pay income tax on it as salary sacrifice.

Ideally there's be no income tax or VAT at all, and we'd tax wealth/land/property instead so this would be a non-issue.

If you pay income tax on everything else, then a carveout for a specific item is a subsidy.

Money being collected and then paid back is not required for the government to be subsidising something. It is sufficient that's the revenue collection be foregone.

That is true for a lot of government schemes that work with credits , you need to have taxable income to benefit from tax credits , so higher income means more benefits up to a point

> perversely enough the subsidy increases the more you earn and the higher your taxes

Isn't this because those who are going to buy EVs today (which are premium if not luxury vehicle prices) are those who have more money to do so? There is not yet a widely available entry level priced EV that is broadly popular.

no, its because in a higher tax braket you pay more tax

its the sane in britain - if you earn $200,000 income-tax-free means 50% off, but if you earn $20,000. it means like 5% off

Also in Uk id you want to buy a e car, you get a grant of a few grand, if you want an e motorbike you get like $300, and if you want an ebike, the most wco friwndly option, you fuck right off

>>and if you want an ebike, the most wco friwndly option, you fuck right off

That's absolutely not correct, the tax subsidy for buying bikes and ebikes in this country is bonkers and better than pretty much anywhere else. If you have any job you can always buy any bike(including an ebike) through the cycle to work scheme meaning it's deducted from your salary pre-tax (meaning that effectively it's a deduction from your own income tax).

> That's absolutely not correct, the tax subsidy for buying bikes and ebikes in this country is bonkers and better than pretty much anywhere else.

Have you actually tried using it? Four problems:

1 - The bicycle belongs to your employer, and when it's ownership is formally transferred to you, you have to pay tax on it.

2 - The 'cycle Scheme' is implemented separately by each major bike shop running their own scheme, Halfords runs Cycle2Work, Evans runs Ride to work. Your employer signs up to one or the other. If you are on Cycle2Work you can't but from Halfords

3 - If you want something that's not in Halfords, like a specific seat you like or a Bafang Conversion kit, then you have to go to independent shops that are 'in network'. Halfords charges 15% commission, and Evans charges 10%

4 - Employers set random limits, for example my employer does not allow over 1K spend, so you can't buy a decent ebike

I have. We have an ebike that was £2200 brand new, and it was effectively a 100% tax deduction. And yes there are some restrictions around it but they are easy to work with. I have no comment about employers setting their own limits, that's just dumb.

Props to you, I also use the scheme but I had to get a bicycle one year, then wait, and get motor next year and install it myself. Because of the limit.

Most people would not even realise that there are little shops besides halfords on the scheme, and attempt DIY.

Basically I think it would be much simpler, and cheaper to administer if we did away with all the employer nonsence and just removed all taxes from bicycles, like VAT.

Exactly, with no benefit in kind (unlike an EV which attracts 2% at the moment and increases by 1%/year from 2025).

Should it be a refund (instead of a tax break)?

I'm leaning towards the refund since it effectively gives everyone the "same final price"

Not for the goal in the UK. The UK doesn't have a tax break for buying electric cars as regular people at home, it's for companies. The important tax break more specifically is around providing them to workers under what's called a "salary sacrifice" scheme where you forgo some of your income in return for a benefit in kind. The BIK rate for EVs is very low, meaning they're almost tax free. This is targeting people who get new cars under hire agreements, drive them for a few years then get a new one - the goal is to increase the second hand market.

also

> its the sane in britain - if you earn $200,000 income-tax-free means 50% off, but if you earn $20,000. it means like 5% off

For SS schemes the person earning £20k would be paying a marginal rate of 32%. Most people earning more than this have a marginal rate of 42%, then frankly the figures get complicated to explain but it's a very small minority of people that hit those levels.

> *"The UK doesn't have a tax break for buying electric cars as regular people at home"

Not exactly true. Besides company car tax (BIK) benefits, electric vehicles are exempt from vehicle excise duty, which can save up to £4000 over the first 5 years of vehicle ownership. They are also exempt from congestion charges, low emission zone charges, etc, which can save thousands more. There's also no fuel duty on charging an EV, you only pay 5% VAT on electricity if charging at home, many local councils offer discounted parking and/or charging, and there is a grant available that pays 75% of the cost of installing a home charger.

Probably, but this is Australia we are talking about. It's a literal boomer welfare state.

Ok maybe a little bit of hyperbole but not that far off the mark, fiscal policy in Australia is dominated by preferential treatment for the boomer generations finances.

Ideally we would provide incentives in the form of a refund for all vehicles below a net carbon value per km (so including plugin hybrids, etc) that are priced below a given value, say $40k AUD or something, whatever is actually affordable mid-range car (not sure about specific numbers).

The idea is that hybrids are probably going to be at a disadvantage unless they are insanely efficient, BEVs will need to bring prices down to qualify for the incentive and generally speaking we end up with drastically more efficient -and- cheaper cars as a result.

However it's also not a great look if all the boomers are buying 911s instead of Model S/X etc so may as well drop the luxury car tax for full BEV vehicles so gas guzzlers are at a disadvantage across the spectrum.

In Norway we simply removed all taxes from battery EVs. Last year 80% of new cars sold were pure EVs. The plan is to ban new ICE car sales in 2025 but the law has not been passed yet as far as I know. But because the market is already so dominated by BEVs there is probably no need to rush.

> and if you want an ebike, the most wco friwndly option, you fuck right off

The most eco friendly option is still a bike. Not an ebike.

An ebike ridden 10,000 km a year beats a bike ridden 2000 though.

How are you making that comparison?

Do you mean an ebike ridden 2,000 km for errands and 8,000 km for fun; vs. the 2,000 km for the bike, for errands, but no biking for fun? That is, are you implying that the ebike is a lot more fun than a regular bike?

Or are you comparing 10,000 km on an ebike; vs. a bike ridden 2,00 km and some other personal vehicle used for 8,000 km? That is, are you implying that a human-powered bike means people will overall use worse forms of transport?

Or do you mean something else?

I think the implication is that commuting longer distances (20km+) is doable on an e-bike.

My commute is 10km (300m uphill) on a regular bike, but I have access to a shower. If I didn't, I don't think I could do it on a regular bike.

In general, it's able to displace longer trips (other than biking for fun) than a non-electric bike.

> In general, it's able to displace longer trips (other than biking for fun) than a non-electric bike.

Exactly.

Since converting to an e-bike, I am using it 4x as much. Especially in the summer, it changes from a sweaty trip to a pleasant one. Those tips would normally be public transport.

10K sounds a bit ambitious, but myself and a friend are on track to exceed 3K.

This whole discussion is splitting hairs -> out of a single electric car, you can make 150 ebikes.

A good ebike battery is 0.5 KWh, a an electric car is ~80 KWh. An electric car might weigh 1500 KG and an ebike like 15.

So really it seems the conclusion should be that the ebikes are overpriced and they should cost $500 if their productions was automated like production of cars is.

I think they mean that you could end up using an ebike in situations where normally you’d use a car or some other form of transportation.

What confuses me is the leadup is about getting an ebike, vs. an ecar or emotorbike. Not about getting both a(n e)bike AND some other more ecologically damaging form of transport.

10k km a year on a bike means riding it for more than an hour every workday. Not a lot of people willing to do that, i think. If that were truly the breakeven distance (i know you didn't really say that) ebikes would be screwed in terms of ecological impact.

That’s half an hour to work, half an hour back. Not outlandish, if you compare normal commutes.

Assuming 250 work days (50 weeks * 5 days), that's 40km/day.

I don't think most people bike at 40km/hour.

Across a year, that averages to 27.4 km per day, biking each and every day.

If done in an hour, that's rather faster than my average biking speed of about 16 kph.

I said more than an hour. I think an hour on a bike is something most people can stomach easily, but it gets annoying fast once you go above that.

I did 50 minutes each way in LA, from Santa Monica to El Segundo. I loved it, except for the parts with cars.

Depends. If you ride a lot, ebikes are actually more eco-friendly, because electricity is more carbon friendly to produce than the extra calories you'd eat.

Judging by people's waistlines they're already eating the extra needed for the cycling, they're just not cycling.

According to COVID-19 and Obesity: The 2021 Atlas[1], the figures for the UK are:

- 63.7% of adults are overweight i.e. BMI >25kg/m2 (2016)

- 27.8% of adults are obese i.e. BMI >30kg/m2 (2016)

[1] https://www.worldobesity.org/resources/resource-library/covi...

Obese people won't get on a bike, though, because it's too big of a step. An ebike is a decent gateway into weight loss.

Exercise is for health, diet is for weight loss. The overlap exists but is minimal. Exercise activity hermogenesis (often known as EAT, ironically) is usually estimated to be around 5% of total daily energy expenditure (TDEE).

I wouldn't be surprised if the obese people in question started to exercise and actually increased their food intake to match.

Your theory is worth discussing.

While in an absolute instant sense energy use might win for the machine, you probably forgot to factor in the lifetime cost of the production of the machine's components. I do not blame you as such a task seems exhaustively daunting, and we only ignore it for the people because who would be heartless enough to think that way? (probably insurance agents, lawyers, and such...)

There are also pros and cons to the different elements. Exercise on a bike might have a hard to measure benefit compared to an e-bike. On the other hand adoption pressures and increased hygiene needs are more positive and negative side effects.

According to this article, ebikes do produce fewer carbon emissions than conventional bikes overall, while considering manufacturing costs:

https://www.bikeradar.com/features/long-reads/cycling-enviro...

There's an interesting blog post about this topic: https://keith.seas.harvard.edu/blog/climate-impacts-biking-v...

That's assuming you'd just eat less, instead of eating the same and burning it off at the gym. Or getting fat.

is something not used the most eco friendly option?

What is and isn't used comes down to the person, so it's pretty hard to factor in. Certainly in my city most bikes I see people out and abouton are not electric.

Shame the infrastructure is so lacking, and the Victorian government have a road tax specifically for EVs

Well, they ain't paying tax for fuel, roads have to be fixed for something...

Fuel excises do not get allocated directly to some kind of "road budget", they go into general revene. Almost all of it can be accounted for in corresponding fuel tax credits, three quarters of which go to mining companies. From memory the difference in 2019 census was like 100mil, so 7.8billion came in from fuel excise, 7.7billion went back out in fuel tax credits.

In essence, everyone pays for federal roads, road user or not, and municipalities pay for local roads. Except for larger state funded projects, which often receive federal assistance. Fuel taxes are a trivial component to infrastructure upkeep, is my understanding.

Another myth is that vehicle registration pays for roads, vehicle registration goes entirely to running the vehicle registration apparatus, that's all.

In 2021-22, fuel tax raised $18.2 billion, of which $6.89 billion (38%) was returned as fuel tax credits. https://www.aph.gov.au/About_Parliament/Parliamentary_depart...

Oh I was way off, I doubt 2019 was much different. I'll adjust my parent comment.

> “Fuel taxes are a trivial component to infrastructure upkeep, is my understanding.”

If that’s true, Australia needs to think about raising its fuel/vehicle taxes!

In the UK, the opposite is true: direct fuel and vehicle taxes raise 3-4X more revenue than is spent on roads annually[1]

[1] In 2021/22, £11.8 billion was spent on UK local and national roads, vs £28 billion raised from fuel duty and £7.1 billion from vehicle excise duty.

The point is that people using are paying that. We dont have fuel tax credit here (Poland) so

> 7.8billion came in from fuel excise, 7.7billion went back out in fuel tax credits.

just seems like pointless excercise in bureaucracy...

Have you got any info on this? Last I heard EVs were getting made even more expensive due to the luxury car tax. (Which, yes you get a partial discount on for EVs, but even still, a reduced additional tax is still an additional tax)

A tesla base model is 60k, which is just below the luxury tax. If you purchase this car, you'll get all the ev tax benefits without the luxury tax downsides.

The Dutch tax incentives were quite attractive, especially on lease cars, but it's been (being) dialed way back because it's costing the government too much income.

Do you have a link to this tax incentive? When did it come in?

Here it is from the ATO: https://www.ato.gov.au/Business/Fringe-benefits-tax/Types-of...

It came into effect a few months ago, but was back dated to 1 July 2022.

I think the original comment is misleading. As far as I can tell you need your employer to buy the EV for you; and then they don't have to pay Fringe Benefits Tax on it. This might benefit people who get a "company car" but I don't know of anyone who has gotten a fringe benefit as large as a car from their employer before. I don't doubt it happens but I doubt it helps anyone except employees and employers who could comfortably afford the tax to begin with. I'm not a tax expert so I could be completely misunderstanding this though.

It’s common – you accept a reduced salary in exchange for the fringe benefit. It works particularly well for FBT-exempt employers like charities and state health departments. https://en.wikipedia.org/wiki/Salary_packaging

No, it's very common and there are companies that exist to provide this as a service, just look up "novated lease".

It also requires the vehicle to NOT be subject to Luxury Car Tax ... which many longer range EVs are.

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