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by Tim Beissmann

Toyota Australia has called for the Luxury Car Tax (LCT) to be abolished, labelling the current system “inefficient, punitive and poorly designed”.

Toyota Australia senior executive director sales and marketing, David Buttner, said Toyota’s recommendation was in line with the 2010 Henry Tax Review.

“Toyota Australia would like to see the Luxury Car Tax abolished,” Mr Buttner said.

“… At the very least, it should be fundamentally reformed to feature a more realistic threshold and to exclude low emissions vehicles and parts and accessories from the tax,” Mr Buttner said.

The LCT is a 33 percent tax on luxury cars. The tax applies to every dollar spent over $57,466, or $75,375 in the case of ‘fuel efficient cars’, which have a combined cycle fuel consumption of no more than 7.0 litres/100km.

Vehicles that fall over the threshold include the Ford Territory TDCi, Holden Calais V8, Mercedes-Benz C-Class and the Subaru WRX STI.

Mr Buttner said the LCT hit Toyota customers hard. Last year, the Toyota Prado and the Toyota LandCruiser were the top two vehicles to exceed the LCT threshold, with 15,423 and 7272 sales respectively.

He said it was discriminatory that cars were the only items hit with an additional ‘luxury’ tax.

“Toyota Australia and the Federal Chamber of Automotive Industries have long opposed the Luxury Car Tax on the basis that no other consumer product has an additional tax applied simply because the value of the product exceeds an arbitrary threshold.

“It is a tax people have to pay in addition to GST, stamp duty and registration fees when buying a new car. On top of that they pay tax on the fuel they use in their cars,” Mr Buttner said.

To get a bit of a feel for the tax, here are a few examples:

If you buy a Territory TDCi AWD for $63,240, $1332 of that price will be LCT. Without LCT, the Territory would cost $61,907 before other government and dealer charges (like registration, insurance and stamp duty).

If you’re jumping up to a $127,500 Land Rover Discovery 4 V8, $16,162 of that price will be LCT. Without LCT, the Disco would be yours for $111,338 before other on-road charges.

And if you’ve got the need for speed, the $526,950 Ferrari 458 Italia might be on your wish list. No doubt it would be even more enticing if not for the extra $108,342 LCT added to the price by Gillard and Swanny. Without LCT included, the Ferrari starts to look a bargain at $418,608.

Do you agree with Toyota that the Luxury Car Tax should be abolished, or does it just need a tweak? Do you consider vehicles priced over $57,466 to be luxury cars, or should the threshold be raised to only catch more expensive purchases?

Let us know your thoughts in the comments section below.




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