VACC Repeats Its Call for the Abolition of the Luxury Car Tax

MELBOURNE – July 3, 2012: The Australian Government increased the threshold for the luxury car tax (LCT) from $57,466 to $59,133 on 1 July 2012. VACC, the peak automotive industry body in Victoria, has campaigned for the tax to be either scrapped or, at the very least, for the threshold to be significantly increased.

In July 2008, in a submission to the Senate Economics Committee Inquiry into Luxury Car Tax Bills, VACC stated that the ‘LCT is a remnant of a time when sales taxes and other inequities existed prior to the GST, taxing products at different rates without sound policy objectives. VACC recommends that the LCT threshold be increased to at least $75,000 and preferably to over $100,000 in order to catch up with the failure to index the threshold appropriately in the past’.

Today, VACC stands by that same statement.

“To say we are disappointed is an understatement,” VACC Executive Director, David Purchase, said.

“Time and again, we have informed the Federal Government that this tax is unfair. As recently as May this year, in our Federal Budget analysis, VACC stated that this inappropriate imposition on vehicle purchases should be removed or, at the very least, the threshold should be doubled. Therefore a 2.9 per cent threshold increase falls way short of our expectations.

“The announcement is also frustrating because this tax should be repealed, and yet, the decision proves the Government has every intention of continuing to tax motor vehicles as luxuries.

“Many vehicles in the $59,133 and over price range are family vehicles featuring important safety technologies and are considered a necessity by the purchaser rather than an indulgence. When you think of luxuries, most people think of the excesses of the rich and famous, for example, a private jet or helicopter, yachts, jewellery, or works of art, and yet, these extravagant purchases are not subjected to additional taxes.

“We repeat our call to the Federal Government to review the LCT with a view to scrapping it,” Mr Purchase said.

VACC is not alone in its condemnation of the LCT. Both the state and national Australian Automobile Dealers Associations (AADA-Vic & AADA-National) and the Australian Motor Industry Federation (AMIF) are also campaigning for the abolition of the luxury car tax.