Recent changes announced to the luxury car tax (LCT) will see it increase on July 1 to $61,884 in line with CPI – an increase of $1,568. Vehicles with a combined fuel consumption less than 7.0 litres/100km will have a threshold of $75,375.
LCT is a tax of 33% on luxury cars sold or imported where the value of a car exceeds the luxury car threshold. LCT only applies to the amount above the luxury car threshold.
Cars such as the Toyota Land Cruiser and Prado will pay the highest tax to the government rather than the more luxury brands associated to the tax such as Audi, BMW or Mercedes Benz.
Mercedes-Benz has been the most vocal opponent of the tax in recent years, but Toyota is now also singing from the same hymn sheet.
Mercedes-Benz senior manager of corporate communications David McCarthy says it had always been a “tax on technology”, and couldn’t see the government knocking back the $500 million it raised annually.
“We all know the tax doesn’t make sense. No sense at all,” he says.
“It’s irrational, it’s been condemned by the European Union, and even the Henry Tax Review said it should be abolished.
“The reality is, politically it’s very difficult to remove. We proposed a couple of years ago to replace it with an emissions tax. But the race has definitely been run. The time for manufacturers to get together on this was a long time ago.”
To offset the rise, Toyota dropped the prices of 19 of its more expensive models by up to $470 but slammed the Federal Government in the process.
Toyota has urged federal politicians to abolish the luxury-car tax, describing the impost as ‘discriminatory and inefficient’.
Autotalk ran a story on Toyota’s vocal opposition to the tax which you can read here.
Other brands such as BMW, Infiniti, Jaguar, Land Rover, Lexus, Mazda, Porsche, Range Rover, and Volvo all confirmed they have passed on the tax reduction in full to customers through a reduction in the list prices of affected vehicles.
Ferrari Australasia chief executive officer, Herbert Appleroth is another vocal opponent to LCT. “It really is absurd that we continue to tax cars which are over $60,000 — that is no longer a luxury car,” Appleroth told the Herald Sun.
The head of Ferrari’s Australia and New Zealand division was more reserved in his comments on the 5% tariff levied on imported vehicles, saying it was a matter for government. But he noted the nation no longer had a car manufacturing sector to protect.
On the other hand, Audi, Chrysler, Jeep, Lamborghini, Lotus, Maserati, Mitsubishi, McLaren, Nissan and Volkswagen told CarAdvice they had elected not to pass on the saving to customers directly through price cuts at this stage.
Audi Australia senior product communications executive Shaun Cleary says a final decision had not been made yet, but suggested the brand was likely to increase the value of affected models by adding features to MY15 vehicles, which should start arriving here in the final quarter of next year.
Lamborghini Australia spokeswoman Susan Darwiche says no price changes had been passed on from head office, though said pricing, as always, would be a matter of dealer discretion.
Lotus and Maserati Australia general manager Glen Sealy told CarAdvice there were no changes to the prices of its vehicles at this stage but confirmed the situation would be assessed as part of the brands’ product programs for the second half of the year.
McLaren Australia brand manager Jay McCormack says the company had already effectively passed on the savings to customers after pre-empting the threshold increase when repositioning its line-up in May 2013.
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