Australian Luxury Car Tax: Increased To 33%
Motoring Channel Staff - 12/May/2008
The luxury car tax is applicable to any car over
$57,000, including the Porsche 911 convertible,
and will rise from 25% to 33% in the new budget
The Audi S3 Sportback will be hit by the new LCT
Audi's Managing Director Joerg Hofmann has
labelled the new luxury car tax 'disappointing'
Canberra, Australia —
The cost of luxury cars is about to rise after the Australian Federal
Government announced it would increase taxes on certain goods.
The luxury car tax has risen from 25% to 33%, a rise of 8%, which would increase the price of an S-Type Jaguar by around $2600.
Treasurer Wayne Swan said "We don't think it's unreasonable that people who've done well in
recent years, particularly from government decisions in terms of
top-end tax cuts, just pay a little more for a luxury car," he said.
The new government is making a number of budget cuts, most of which are aimed at those in the top salary brackets.
tax parlance, a 'luxury car' is not just a BMW or a Lexus, but any
vehicle that costs more than $57,000, so in actual fact the 8% tax
increase relates to a range of vehicles.
Cars above the $57,000 make up about 100,000 new car sales per year in Australia, or about 10% of annual sales.
Malcolm Turnbull, the Shadow treasurer, said the tax would effect all motorists: "It
adds to the cost of one part of the motor vehicle universe and
inevitably the price of other vehicles will move up, because that will
give them a bit of headroom. So all cars in Australia will be more
expensive as a result of this," he said.
Chamber of Automotive Industries (FCAI) labelled the new tax
increase bad policy. The FCAI's chief executive Andrew
McKellar has made it clear that he wants independent senators to
block the change in parliament.
"Some of these larger-sized family vehicles
will be impacted by this tax," said Mr McKellar. "I would hardly describe those sorts of
vehicles as being at the luxury end of the market, yet over time they
have been captured by this tax because the threshold has not kept pace
with inflation," he said.
Do you agree with the new tax?
One argument is that the tax should stay, but the definition of a
'luxury car' in taxation terms should be changed to vehicles costing
$70,000 or more.
last night the managing directors of both BMW and Audi spoke out
against the Government's proposed changes to the luxury car tax,
labelling them disappointing and counterproductive.
Seemann, the Managing Director of BMW Group Australia said, "Over the
years luxury brands pioneered new safety technologies such as airbags,
ABS brakes, and Electronic Stability Control. Today, mass market brands
and their customers reap the rewards.
luxury brands are today at the forefront of engineering cleaner cars
which emit less CO2 emissions. For example, the BMW 530i emits nearly
20 per cent less CO2 than an equivalently sized and powered Holden
"The logic of higher tax rates for cars with lower CO2 emissions is flawed.
tax system based on CO2 emissions would align better with the
Government’s position on the environment," added Mr Seemann.
Audi's MD, Joerg Hofmann, said the new tax change will have serious ramifications for the
competitiveness of the Australian automotive industry, and the
car-buying public in general.
Federal Government’s surprise tax increase could see the price of
premium cars rise unnecessarily, affecting families and individuals who
are prepared to invest in motor vehicles with the latest technological
innovations – from advanced safety and driver assistance systems,
to cleaner, greener engine technology," Hofmann said.
says he trusts that the Prime Minister will, nonetheless, stick to the
Government’s scheduled reduction in tariffs on imported cars from
10 percent to 5 percent from 2010.
"I hope Mr Rudd will honour the original agreement, reducing import tariffs in 2010," Mr Hofmann said.
this tax increase is truly intended to help reduce inflationary
spending, then where is the tax hike on expensive jewellery, luxury
powerboats or private jets?,” Mr Hofmann added.
VACC also weighed into the debate. The Senior Manager for Government
and Corporate Affairs, David Russell, said: "Luxury Car Tax is
inherently unfair. $57,123 is the current threshold, but this figure
has not kept in step with vehicle pricing. Many family models,
especially when optioned with accessories, now fit into this price
timing of the announcement has also caused some surprise. The Federal
Government has invited Mr Steve Bracks to carry out a comprehensive
review of the Australian automotive industry. Submissions to the review
are due in this week. So it seems surprising to the VACC that Mr Swan
did not consult Mr Bracks or wait to hear the results of his review,
which is due to consider LCT.
is still at a loss to see why cars are deemed the most luxurious of
luxuries. Luxury is subjective. Boats, private jets and helicopters,
international holidays, jewellery, furniture even Plasma televisions
are luxury items to some. Yet these high priced goods are not taxed as
luxuries," said Mr Russell.
local automotive manufacturing industry is already fighting for
survival. The LCT increase is another body blow which will affect
sales, after-market service, jobs and the local economy. The Government
should recognise that by putting up taxes, it has jumped the gun on the
Bracks’ Review," Mr Russell said.
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