Business Tax Working Group’s plan to keep older trucks on road

The Business Tax Working Group’s proposal to remove statutory effective life caps on trucks and trailers will make it harder for trucking businesses to upgrade their older trucks to safer and more environmentally friendly models, ATA Chief Stuart St Clair said.

The working group’s discussion paper proposed $26 billion in business tax savings to fund a reduction in the company tax rate.

It suggested removing the statutory effective life caps on a range of assets, including trucks and trailers. Trucking businesses that do not self-assess the effective lives of their vehicles would be required to depreciate trucks and trailers over 15 years rather than 7.5 years for trucks and 10 years for trailers.

ATA Chief Executive St Clair said removing the caps would impose a significant cash flow burden on trucking businesses, despite the proposed cut in the company tax rate.

“The after tax cash flow gap would amount to $4,163 per year for each typical prime mover,” St Clair said. “This cash flow gap would reduce operators’ ability to purchase new trucks and renew their fleets with safer and more environmentally friendly equipment.

“Every new generation of trucks is safer than the last. Safety standards like the requirement for front underrun protection apply to new trucks, not retrospectively to all the vehicles in service. In addition to the mandatory safety standards, many new trucks have safety features that are found in only the most expensive cars, like adaptive cruise control and lane departure warning systems.

“New trucks are also more environmentally friendly. A new truck, bought today, puts out only 25 per cent of the nitrogen oxides and 8.3 per cent of the particulate matter emitted by a new truck bought in 1994.”

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