SOME of the safest cars coming into Victoria look set to become less attainable from July 1 when the State Government hits them with a new tax. The scaled increase in duty on cars priced from more than $100,000 will be on top of the 10 per cent GST and the 33 per cent “honeypot” Luxury Car Tax (LCT) already applied on every dollar above $66,331.
Announcing the plans today as part of the Victorian State Budget, Treasurer Tim Pallas described the tax as part of a revenue raising strategy designed to “not substantially distress the broader community”. But its delivery follows one of the worst starts to the year in terms of road deaths in Victoria. Already 134 lives have been lost on the state’s roads, a 52 per cent leap on the figure of the same time last year, and well above the five-year fatality average of 103, according to the Transport Accident Commission.
‘If you can buy a $200,000 Maserati, you’re not going to be particularly fazed by a slight increase in the rate of vehicle duty that you have to pay.’
The duty will be applied as $14 per $200 of market value on cars valued between $100,000 and $150,000, while vehicles worth more than that will face an additional $18 per $200 of market value. Low-emissions passenger cars and cars used by primary production farmers will be exempt from the tax.
“If you can buy a $200,000 Maserati, you’re not going to be particularly fazed by a slight increase in the rate of vehicle duty that you have to pay,” Pallas told the ABC.With lower stamp duty revenue resulting from a soft housing market, the new tax on luxury cars will help boost state coffers, adding an estimated $260 m.
The automotive industry has slammed the tax, with its peak body, the Federal Chamber of Automotive Industries (FCAI), describing it as “money grabbing at its worst”.“But what’s more disturbing is that it is a tax on safety and technology,” says FCAI chief executive Tony Weber. “It targets vehicles that introduce innovative safety and technical features to the market.”
Weber has called for the abolition of the federal LCT which was introduced to support Australia’s local vehicle manufacturing industry – one that no longer exists. So not only is it therefore redundant, Weber says, it could also hamper the development of a European Free Trade Agreement.
“The EU regards [the LCT] as a false tariff and there is no doubt that it is a tax on technology and safety, preventing consumers from accessing the newest and safest vehicles,” he says.