According to a report by The Australian, the Luxury Car Tax – which places an additional cost of 33 cents for each dollar above a certain threshold – could be scrapped, if the re-elected Federal Government gets its way.
The publication claims “a source close to the Prime Minister [Anthony Albanese] said the government was prepared to dump the tax in return for better access for Australia’s agricultural exports”.
“Over the weekend, we got calls from the Europeans saying, ‘speed things up’.”
The Luxury Car Tax was introduced at the start of the 2000/01 financial year, and served partially to protect Australia’s car industry.
However, despite local manufacturing ending in October 2017, the LCT has remained, and currently applies to vehicles with a dutiable value $91,387 which consume less than 7.0L/100km, or $80,567 for those above it.
Currently the LCT brings in about $1.2 billion in tax revenue annually, however most vehicles which are hit by the tax aren’t the luxurious vehicles you may think of, with even some versions of the Ford Ranger and Toyota LandCruiser sitting above the threshold.
Though it may seem strange to finally consider killing it off, pressure has been mounting from European nations – whose cars were long the target of the LCT, or those which suffered the largest detriment – to have the tax axed.
It’s understood the reported growing interest in scrapping the LCT would provide Australia the ability to secure “a better deal on agriculture” with European nations, which would see their vehicles more favourably priced here.
European carmakers are currently trying to fend off the rise of more affordable Chinese rivals in their home market, and though tariffs have been imposed on most brands, it hasn’t stemmed the flow of sales.
By not having to deal with the higher price for buyers imposed by the LCT, European brands would likely wind up in a more favourable position in Australia.
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