Tax reform

29 April 2022

Driving change

The removal of unproductive state levied taxes will help boost Australia’s post-pandemic recovery.

Let’s start with Luxury Car Tax (LCT). 

It’s a tariff on new vehicles less than two years old with sale values above a threshold set annually by the ATO. 

In 2001 it was introduced to deter Aussies from buying luxury imported vehicles and favour those locally produced. 

With each of these brands phasing out Australian manufacturing, it’s time for government to seek an alternate, more progressive revenue stream. 

A higher rate of Goods and Services Tax (GST) for a broader base of luxury goods – acknowledging the administrative challenges – is an option. 

To date, GST has been missed as a key topic in the post-COVID reform debate. 

Additionally, as the number of Zero and Low Emission Vehicles increases within the Australian vehicle fleet, revenues from fuel excise will decline, affecting the capacity of the Federal Government to maintain adequate levels of investment in road infrastructure. 

Current inconsistencies in road-user charging regimes being implemented across jurisdictions is concerning. 

There is also a lack of clarity as to the Commonwealth’s role in road-user charging moving into the future. 

The next Australian Government should:

• Abolish LCT 
• Reform the GST to allow for the removal of unproductive state-levied taxes to help boost Australia’s post-pandemic recovery
• Foster a nationally consistent and coherent approach to road-user charging and road-related investment and alleviate the potential for double-taxation between the Commonwealth and states and territories.

Read REVolution: The automotive industry’s policy priorities for the next Australian Government.

Words: TACC State Manager, Bruce McIntosh. As featured in The Mercury Friday 29 April 2022.