Dutton Clarifies Coalition’s Position After Confusion Over EV Tax Breaks

Dutton said his earlier comments were misunderstood.

Liberal Party Opposition Leader Peter Dutton speaks during a Leadership Matters breakfast in Perth, Australia on April 11, 2025. Matt Jelonek/Getty Images

Opposition Leader Peter Dutton has clarified the Coalition’s stance on electric vehicle (EV) tax breaks after a sharp policy reversal caused confusion.

On April 21, Dutton told reporters he had “no” plans to scrap Labor’s fringe benefits tax (FBT) exemption for EVs bought through novated leases—an arrangement where employees lease a car and make payments through their salary, reducing their taxable income.

But just days later, the Liberal Party announced it would axe the scheme if elected, calling it “badly designed” and part of a broader push to cut wasteful spending.

When confronted for clarity during a press conference on April 24, Dutton said his earlier comments had been misunderstood.

He said he had been referring not to the FBT exemption but to Labor’s New Vehicle Efficiency Standard (NVES), which imposes penalties on carmakers that exceed emission caps.

‘Misunderstood’ or Misstep?

Dutton said the Coalition’s real issue was Labor’s decision to cut hybrids from the EV tax break, calling it a “big tax on hybrids.”

He also claimed Labor’s emissions standards would push up car prices, citing estimates that the cost of a Ford Ranger, the most popular vehicle in Australia, could rise by $14,000 under the new vehicle efficiency standard.

The standard aims to bring cleaner, fuel-efficient cars into the Australian market by financially penalising manufacturers that exceed emission targets on imported fleets.

In defence, Shadow Treasurer Angus Taylor said Dutton had simply misheard the question at the press conference on April 21.

“Our position on this taxpayer-funded subsidy has been clear for a long time,” Taylor told the ABC. “Peter misheard the question.”

Popular Scheme on the Chopping Block

The fringe benefits tax exemption was introduced by Labor to encourage the uptake of low- and zero-emission vehicles.

It allows Australians to buy EVs under $91,000 through novated leases without paying fringe benefits tax.

Since its launch, nearly 100,000 drivers have used the exemption, contributing to a record year for EV sales.

According to the Electric Vehicle Council, over 100,000 EVs have been sold in Australia in 2024, representing 9.5 percent of all new car purchases.

Despite this growth, the Coalition says it will abolish the scheme to save $3 billion over the next four years and up to $23 billion over the medium term.

Coalition Targets Broader Emissions Policy

Dutton argued the real threat to car buyers was Labor’s New Vehicle Efficiency Standard, which he described as a “family car and ute tax.”

“This is a tax on families who need a reliable car and small businesses trying to grow,” he said. “A Coalition Government will scrap this tax, so Australians can keep more of their hard-earned money when purchasing a new car.”

While affirming support for Australia’s net-zero goals, Dutton said imposing penalties on carmakers and passing the costs onto consumers was not the way forward.

Labor has pledged to maintain both the FBT exemption and the NVES as part of its emissions reduction strategy.