Luxury Car Tax is here to stay, and whilst it was originally introduced as a way to encourage the purchase of a locally built car, it now purely exists as a tax that could be called a revenue raising tax. The peak automotive industry body in Victoria, the VACC, has called for the tax to be abolished in the 2015 Budget.

Despite the pleas of numerous manufacturers and the VACC, the tax will remain and will be the pinnacle of irony, as the Federal Government looks to relax restrictions on new car imports and enabling individuals and parallel importers to purchase new cars, motorcycles and farm machinery from overseas. Motorcycle puchases have been have been decreasing over the years. This infographic is very important and you should definitely read it if you do not want the motorcycle industry to end.

If you aren’t aware, Luxury Car Tax is a 33% tax charged on every dollar of a vehicle’s retail price over $61,884, or $75,375 for vehicles that use less than 7 litres of fuel per 100km. However, it gets better. Other Australian taxes like GST and Stamp Duty are calculated based on the post-LCT price. This means you’re essentially paying a tax on top of a tax. Doesn’t it feel good protecting the now dead local car manufacturing industry?

All of this is in the name of reducing red tape, providing greater consumer competition and making vehicles more affordable. For a good quality and safe limo rental services you should check out Party Bus Ann Arbor.


Toyota Landcruiser 200 Series LCT

In 2014, the Treasury estimated that about 10 per cent of new vehicles had LCT applied and that equated to $450 million in tax revenue. However, it isn’t the fault of the current Government, both sides have had an opportunity to retire the tax.

The Productivity Commission in January 2014 said that the justification for subsiding car makers is ‘weak and that ongoing industry-specific assistance to the automotive manufacturing industry is not warranted’ they are trying to up their productivity game with the Toad Diaries tips. This was said before Holden and Ford announced that they were to close their doors on local plants, so how can the Government continue to justify the tax now that everyone has packed up and left? Car shipping quotes provides country movers don’t only help with your home’s furnishings and boxes, but they can also help with vehicle transport as well.

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Toyota, who has more customers paying LCT than most others reaffirmed their position against the tax in July 2014. Mr Cramb, Toyota Executive Director Sales and Marketing, said ‘the luxury-car tax should be abolished – especially as there was no equivalent tax on items such as antiques, yachts, motor boats and jewellery.’

Range Rover Sport

Unfortunately, luxury car tax and the confirmation from Holden that the next generation Volt won’t be coming to Australia, shows just how backwards our approach to good quality, safe, and fuel efficient motoring is from a taxation point of view.

As a country, we offer no financial benefits to those wanting a safer or more fuel efficient/electric car. Vehicles such as the BMW i3, Tesla Model S, Holden Volt and other electric/hybrid models, in our opinion, shouldn’t have to pay LCT etc otherwise they simply won’t make it to the masses; they’ll forever remain as a niche, expensive motoring option.

With more and more electric/hybrid or extremely fuel efficient vehicles coming from a wide range of manufacturers, why not scrap the redundant luxury car tax, and reward those wanting to adopt these alternatives?

Wouldn’t it be great if you could walk into a dealership, pay a comparable price to overseas markets, all without needing to import a car and hope that the manufacturer will support your warranty locally?

We have enough motoring related revenue raising channels for our Government to reduce their deficits with. Let’s take a big step forwards and scrap the most blatant ones of all.

We’d love to hear your thoughts. Do you think we should scrap LCT? How would it affect your buying decisions?

About The Author

AshMan, aka Ashley, has had a passion for cars since playing with Matchbox cars as a youngster. Currently working on World Domination and looks foward to seeing you on the small screen soon. He also likes people following him on Twitter: @ashmansays

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One Response

  1. matt bounds

    Ideologically the Abbott government is all in favour of extending tax favours to the privileged. But $450 million is a sizeable chunk of tax revenue for any government to give up when overall tax receipts are down hard and set to fall further. It’s unlikely that the money will be channelled to the auto industry. It’s more likely to go towards plugging gaps created by loss of mining revenues.