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Controversial senator David Leyonhjelm has called for the Federal Government to end “punishing layers of taxation” making new cars more expensive.
The Liberal Democrats Senator argues the five per cent import tariffs on cars from nations without an Australian free-trade agreement, along with the 33 per cent luxury car tax (LCT) on vehicles over $65,000, keep buyers out of new cars with the latest safety equipment.
“Cars made in any country with which Australia does not have a free trade deal attract a five per cent import tariff, so more than $1,500 is imposed on entry-level Holden Commodores that are now made in Germany,” he said.
“Then there’s the luxury car tax, which imposes a 33 per cent tax on the value of new cars over $65,000. This adds more than $6,000 to the price of a basic Landcruiser, and more than $120,000 to a top-of-the line BMW.”
“Now add the GST, then state duties of around 3 per cent on top of that. This is quadruple taxation: a tax on a tax on a tax on a tax. It’s a good thing Australians love their cars so much because they are paying through the nose for them.”
Although we currently pay import duties on cars from Europe – aka the Holden Commodore mentioned by Leyonhjelm – an EU/Australian free-trade agreement is in the works at the moment, and we’ve got deals with all our other major car suppliers.
That includes Thailand, Korea, the USA and Japan, meaning the average Australian rarely pays import duty on their new cars.
There’s also talk of the Luxury Car Tax ending, given it was introduced to protect the now-dead local car industry.
David McCarthy, communications head for Mercedes-Benz Australia, has previously told CarAdvice he expects the tax to be gone by 2019 or 2020. There’s even talk of it being culled when the imminent free-trade agreement is signed.
Taxes aside, the Senator called out the average age of Australia’s fleet, highlighting the fact “old cars are less safe and emit more pollution” than their newer counterparts.
“Crippling car taxes are not just making us poorer. They are costing lives on Australian roads.”
According to the Australia Bureau of Statistics, the average age of the 18.8 million motor vehicles is 10.1 years. Where small cars sold in 2018 are loaded with semi-autonomous systems like auto-emergency braking and blind-spot monitoring, the technology was the preserve of high-end vehicles in 2008.
With that said, more than 30 per cent of vehicles on the road are five years old.