Industry News
Australia increases luxury car tax to 33%
12th May 2008
While the Australian commonwealth government has today increased its luxury car tax , a submission to a government-commissioned review on Australia's automotive industry by the government of the most automotive-intensive state, Victoria, says keeping car import tariffs at 10% rather than cutting them to 5% by 2010 as planned would help offset the disruption of global challenges to the domestic industry.
The position paper calls for reform to improve the efficiency of the industry by introducing competitive tax regimes, more support for developing environmentally friendly cars and reducing bureaucratic red tape.
"The automotive industry is a major manufacturing employer with over 60,000 employees nationally and 38,000 in Victoria," says the submission. "It is a major exporter responsible for $4.7 billion annually, $2.6 billion from Victoria, where it is the second-largest export sector and the largest goods exporter."
The Victorian Government also argues the Rudd Government's $500 million Green Car Innovation Fund should be spending on developing hybrid vehicle technologies.
The findings of the industry review, led by the former Victoria prime minister, are due by 31st July.
Meanwhile the Australian government has confirmed that this year’s budget will increase an existing tax on luxury cars priced above A$57,000 from 25% to 33%, which will affect 105,000 Australian car purchases a year. Andrew McKellar, chief executive of the Federal Chamber of Automotive Industries, said: "This tax is unnecessary and discriminatory and should be abolished ... certainly not increased."
The increase will drive up non-luxury car prices across the board, according to Opposition Treasury spokesman Malcolm Turnbull. "It adds to the cost of one part of the motor vehicle universe, and inevitably the price of other vehicles will move up, because that will give them a bit of headroom," Mr Turnbull told ABC TV. "All cars will be more expensive as a result."
The Australian Treasurer, Wayne Swan, said an increase in tax on luxury cars was fair as people who bought them could afford it. "We don't think it is unreasonable for people who have done well in recent years from government decisions in terms of top-end tax cuts, to just pay a little more," Mr Swan told the Nine Network. "We think it is only fair that people who can afford these cars make a small contribution in that savings effort."
BMW’s Australian sales company’s MD Guenther Seemann said the higher luxury tax would punish customers who invested in technology to reduce greenhouse gases and increase safety. He advocated a tax system based instead on CO2 emissions.
(The Australian, 12 May).
Details of the luxury car tax can be downloaded from www.ato.gov.au/businesses/content.asp?doc=/content/13288.htm&page=4&H4
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