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Unfair tax must go in new UK free trade deal

31 January 2020

The Federal Government should abolish luxury car tax (LCT) in its post-Brexit negotiations with the United Kingdom, says automotive peak body, the Victorian Automobile Chamber of Commerce (VACC).

VACC says now is the time for the Morrison-led government to do the right thing and drop what it claims is an unfair tax.

“The automotive industry is fed up with the Federal Government continually espousing its so-called free trade agreements when it maintains what has to be the laziest tax in Australia,” said VACC CEO, Geoff Gwilym.

Netting the Federal Government $640 million during the 2018/19 financial year, LCT is the tax with no real purpose except to penalise ordinary Australians for wanting to upgrade their vehicles to safer, more environmentally friendly models.

Luxury car tax applies to all motor vehicles $67,525* and over, including GST. LCT is charged at a rate of 33 percent for the component of the price exceeding the threshold, which can add thousands of dollars to what many Australians would consider ‘normal’ and necessary vehicles.

So-called luxury vehicles above the LCT threshold include the Toyota Prado, Ford Ranger Raptor, Nissan Patrol and Mazda CX-9, vehicles popular with farmers and motorists throughout regional Australia.

More damaging is the fact that new ‘luxury’ vehicles are technological spearheads, used by automotive manufacturers to apply the latest technology. This provides increased safety, and emission and fuel saving measures.

“Ultimately, by penalising motorists wanting to buy these cars, the Federal Government encourages consumers to retain their existing vehicles longer and that just makes the Australian car fleet older, more heavily polluting and less safe,” said Mr Gwilym.

“VACC says it’s time for the Federal Government to get real on free trade and let Australian consumers buy cars without the impost of redundant and unfair taxes.”

ENDS

* $75,526 for ‘fuel efficient’ cars using fuel at a rate of 7.0L/100km or less.

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