Lux­ury car facts

Herald Sun - Motoring - - Welcome - JOSHUA DOWLING NA­TIONAL MO­TOR­ING EDI­TOR Twit­ter: @JoshuaDowl­ing

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

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