Why Luxury Car Tax has to go

1 April 2019

Luxury Car Tax (LCT) is an outmoded and unjust impost on mainstream Australia and should be abolished. 

LCT was introduced in 2000 by the Howard Government to encourage buyers to purchase locally manufactured cars instead of imported ‘prestige’ vehicles. The end of mass passenger vehicle manufacturing in Australia in 2017 now makes this tax redundant.

“It’s about time politicians came clean about LCT. No other sector has this tax imposed upon it. There is no Luxury Yacht Tax, or Luxury Diamond Ring Tax. No, these items are already taxed, with GST payable,” says VACC Chief Executive Officer, Geoff Gwilym.

“But buyers of new vehicles pay all applicable taxes, plus GST, and then they are hit a third time with LCT. It is a tax on a tax and clearly unfair.”

LCT is charged at 33 per cent on the proportion of the vehicle priced over $66,331 (or $75,526 for vehicles categorised as ‘fuel efficient’).

“These thresholds are absurdly low and affect many working vehicles that farmers and people in regional areas rely upon,” says Mr Gwilym.

This includes four-wheel-drive vehicles, such as the Mitsubishi Pajero, Toyota LandCruiser and Nissan Patrol, which are all priced above the LCT threshold.

“These vehicles are essential for performing transport tasks on roads and in conditions that are often unsuitable for regular vehicles. This consequently penalises consumers in rural and regional communities, who are often the purchasers of such vehicles for work purposes,” says Mr Gwilym.

“The automotive industry strongly believes that LCT is unfair and discriminatory towards motorists and vehicle dealers and artificially inflates the price of vehicles that offer the latest in safety and emission technologies.”

VACC recommends that the next Federal Government abolish Luxury Car Tax. 

Download VACC’s 2019 Federal election manifesto Keep Australia Moving.