Luxury Car Travesty
The FBT’s history. Now for the arbitrary and unfair LCT
THE travesty that is the luxury car tax has been driven home yet again.
BMW announced an Innovations pack for its 3 Series range and then had to defend what at first glance was an obvious pricing error.
The 328i Touring (wagon) pack was quoted at $3510. On face value, it should have been far less: as with the 320i wagon, the base price was $2700.
The problem BMW faces is twofold.
First, the $72,900 cost of the car meant adding the pack tipped it beyond the $75,325 LCT threshold— by all of $275 dollars.
In theory, only that $275 should attract the 33 per cent LCT, adding about $70 to the cost. In reality, BMW knows about 80 per cent of 328i customers opt for more than just one pack.
Accordingly, it erred on the side of caution and added LCT to the full $2700 figure, bringing the total price to $3510.
“It’s better for a customer to be pleasantly surprised by a lower total price in the event they are the exception and only order that one pack, rather than get a shock at ahigher cost than they predicted,” BMW spokesman Toni Andreevski says.
“We’re bound by the LCT and the prices quoted are indicative. In this case (the Innovations pack) they reflect the fact that about 80 per cent of our customers choose to option a sunroof and metallic paint, at which point the entire cost of the Innovations pack will be subject to LCT.
“The official price list issued to dealers makes it clear LCT is only payable if the vehicle price exceeds the luxury car tax threshold.”
It’s a similar story for non-European makers.
The LCT applies at a lower threshold, $60,316, for cars that use more than 7.0L/100km. That nets ( just) the likes of a top-spec Holden Calais V8.
So it is also with a mid-spec Toyota Prado, Nissan Pajero and Nissan 370Z, all of which make serious donations to the government coffers.
Formany of the Euro brands, the tax discriminates on a safety front. BMW’s Innovations pack, for example, adds blind spot and lane change warning, forward collision warning and a bird’seye camera view, all of which represent valid safety additions to the car.
In effect, the government is charging adopters of that safety technology a 33 per cent premium.
No matter which way you look at it, with the drive to lower the road toll, that’s not good business.