Luxury car facts
TOYOTA and the Federal Chamber of Automotive Industries are calling on the federal government to abolish the luxury car tax when car making ends here in 2017.
Toyota? Contesting the “luxury” car tax? Here’s why.
In 2008 the Rudd Government increased this discriminatory levy to 33 per cent, which today applies from a threshold of $60,316 — or above $75,375 on so-called fuel- efficient vehicles that use less than 7.0L/100km.
When Kevin Rudd and then Treasurer Wayne Swan taunted the then opposition in Parliament with pictures of Porsches, their message was as clear as it was misleading.
Rather than encouraging the purchase of affordable fuelefficient cars, in practice the efficiency concession favours buyers of prestige vehicles — most popular German cars use less fuel than this arbitrarily chosen amount. Toyota says its buyers, particularly of the LandCruiser, are the biggest contributors to the LCT.
FCAI chief executive Tony Weber says abolishing the LCT would “increase competition in the market” and improve vehicle affordability. In its submission to the Productivity Commission review, Toyota says the LCT is “not a form of protection for local car makers. In fact the market share of locally built cars has dropped significantly since the LCT was introduced.”
Indeed, the Productivity Commission advises against the LCT in its preliminary report into the car industry.
“Because it is levied on a narrow base, “the commission contends, “the LCT is a highercost and less efficient method of raising revenue than more broadly based taxes.”
Quoting the 2010 Henry Tax Review, the commission adds that the LCT “falls on people with a preference for relatively expensive cars, but not on those with a preference for diamonds, fur coats or yachts”. In light of that, it’s hard to argue with Toyota’s claim that the LCT is “punitive and inequitable”.
This government, when in opposition, decried the LCT as the “politics of envy” — but will it scrap the means of making an estimated $450 million each year?
The government claims free trade agreements with South Korea, Thailand and Japan are the answer. But removing the 5 per cent tariff that applies to cars imported from other countries does not guarantee cheaper cars.
Exchange rates are a bigger factor. Our dollar has moved by more than 60 per cent since 2000 — from US63 cents then to a peak of $US1.04 last year.
Politics of prestige: Former Treasurer Swan goads the Coalition in Parliament — but families such as those in the picture in his left hand pay LCT on Toyota people-mover.s Over to you, Joe Hockey