Luxury brands insulted by tax rise
May 13, 2008 by George Skentzos
Luxury car manufacturers have today responded to the Government’s proposal to increase the luxury car tax from 25 percent to 33 percent.
Porsche, BMW and Audi have all released statements openly criticising the tax rise which has been labeled as counter-productive and harmful and that it will add to Australia’s inflationary burden.
Each manufacturer has independently argued that this proposal unfairly targets brands who invest in technology to reduce greenhouse gases and improve safety – declaring it a tax on innovation.
“Over the years luxury brands pioneered new safety technologies such as airbags, ABS brakes, and Electronic Stability Control. Today, mass market brands and their customers reap the rewards,” said Guenther Seemann, Managing Director of BMW Group Australia.
Citing the tax hike as ‘disappointing’, Audi’s managing director, Joerg Hofmann says that for over 100 years, Audi has been at the forefront of innovation, pioneering key technologies which are today taken for granted, even in mass market vehicles. The company was the first to introduce now basic safety features like safety glass, and even pioneered side impact and rollover testing.
This tariff increase will have serious ramifications for the competitiveness of the Australian automotive industry, and the car-buying public in general, says Hofmann.
They also argue that luxury car manufacturers are constantly investing in technology to reduce its emissions and create more fuel efficient cars, and that a tax system based on CO2 emissions would align better with the Government’s position on the environment.
“Increasing the tax burden on Australians who help fund innovation in cleaner and safer cars highlights a lack of appreciation for the role technology innovation plays in the market.” from BMW
“The Government has a direct interest in making cars safer and cleaner, yet has effectively put this kind of technology at risk for Australian buyers, a move that seems directly at odds with its green agenda.” from Audi
Porsche agrees that the new tax unfairly targets the innovators, and also questions the economic benefit of raising the luxury car tax, indicating the budget would be counter-productive, harmful and put at risk the jobs of thousands of Australians employed in the premium automotive sector.
“The high-end of the market has as much elasticity as the low-end. In fact, you could argue that the high-end has more elasticity as most purchases of premium and luxury goods are deferrable. For the Rudd Government to therefore suggest that an increase in tax would lead to an increase in revenue is overly simplistic and incorrect.” says Porsche Cars Australia managing director, Michael Winkler.
A one-third increase of the LCT from 25 per cent to 33 per cent would result in Porsche’s most affordable sports car, the Boxster, moving from $109,300 to $112,400 (+$3,100); while the price of Porsche’s most popular sports car – the 911 Carrera S – would rise from $227,600 to $237,700 (+ $10,100.)
The only consolation for luxury manufacturers is the Government’s scheduled reduction in tariffs on imported cars from 10 percent to 5 percent from 2010.
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If I was the well off australian (I’m not) I’d be quite chuffed at a tax rise, It would make what I drive more exclusive, whilst the poor minions would be driving in their clone Corollas.
Not exactly fair though and the Whinging Lux Car Manufacturers have found a lot to moan about. Why don’t the Pollies raise the threshold to a more realistic ‘luxury’ threshold of say $80K and increase everything above that to 15/16% then the real rich get clobbered.
Imagine the price increase could be practically be absorbed by the luxury car makers with the appreciation of the australian dollar over the last year anyway.
I could mean that some prices come down to limbo under the tax threshold effective leaving a price no mans land around the 57k mark.
To me it was a smart eco move. it Hit the top 10% of the market that generally uses more fuel. The economical variants of the top end market tend to run close the the 57k mark anyway.
the dollar value wont absorb the tax for ages.. it takes anywhere from 9-12 months for consumer eletronics to go down in price with the dollars value, cars. well. sometimes cars never see it.. its justified in the minds of the makers, that with the better exchange rate..shipping somehow costs more….hmmm
this tax is gona hinder alot more than “luxury cars”. i mean.. look at how many cars are priced at over 50k.. when not exactly luxury, shit landcruisers are over that…………….starting to really worry about the rudd government..
cookie
Typical Labor, taxing the very people who contribute the most to this country. While handing out freebies to all the no hopers………..Who votes for these idiots???
ScottT;
Yes there are a few. Refer other story thread….”LUXURY CARE TAX SET TO RISE”
typo – “….car tax set to rise”
I agree with you ScottT,
The Keating government did a similar thing, actually made a lot less money in taxes on luxury cars and dropped the tax back to normal after a year.
Can someone tell me why luxury cars are taxes differently in the first place? I cannot think of a valid reason off the top of my head, other than, they cost more so the tax increases accordingly.
oops, typo “taxed” not taxes
hmm will there now be a tax on better computera ND MORE ERGONOMIC chairs
the oz dollar has only appreciated compared to the dollar, not to the other currencies like the euro
This is typical labor philosophy isn’t it? Shift the tax’s to the upper end of the scale, the people who can afford it, and remove them from the lower end. This should result in a drop of taxs from the lower priced cars. Obviously it couldn’t be of such a large percent, due to the volume, but the mainstream consumer should receive benefits.
Obviously the high end car makers arn’t going to be happy, but is this really going to affect that many people? If you can afford a 60k+ car, you can afford the rather large tax. And most of the everyday man supercars (all the Holden & Ford range) come in under the threshold.
So if the government can manage to get ‘everyday’ car prices down, than it is really a win win situation. A $29,990 drive away VE Omega sounds like a good deal to me.
The Luxury Tax was just a revenue raiser to begin with so the increase is just for more $$$ in the pollies pockets.
Its funny how none of whats happening surprises me with the Labour Government, & now they want to get rid of work for the dole. Freeloaders getting an easier run again.
And whilst we are off topic, whats the deal with droppind the medicare surcharge for people who earn up to $100,000??
All that is going to do is make them drop out of private health insurance, forcing up the rates and hitting those who really need health insurance, but are struggling to pay for it: WORKING FAMILIES.
Oh, thats right, you go through the public system instead, which will cave in under the extra load, forcing up the medicare levy for everyone.
Make no mistake, these changes are veiled methods to force UP a whole raft of mainsteam taxes. (That IS the Labor way).
With the 20 Billion dollar surplus or whatever it will be, you wouldn’t think there’s much justification for the increase…
It will be interesting to see Mercedes Benz’ response to the Government’s proposal.
The luxury tax threshold should have been raised to $80,000 to be a bit more consistent with the world ‘luxury’ and to keep up with inflation.
This is shocking. Just because some people have enough money to buy a 3 series over a Corolla doesn’t mean that they should pay even more for the privilege. They already pay higher taxes due to what they earn so I dont see why you need to pay even more just because you can have a nice car. Besides, I remember about 20 years ago all my dad had ever wanted was a BMW and he never thought he could afford one but he always saved all the money he could and eventually he finally bought his dream car – a 530i. He had been saving for over 15 years! My point is that not everyone who has one of these cars buys them with cash to spare.
I fail to understand the basis for a number of bloggers here making a grandiose statement such as “the rich can afford it”.
If you are so happy to pay more tax then donate some to the cause. I am yet to see anyone pulling more dosh out of their pocket and volunteering to the taxman. If not, keep ridiculous comments like to yourself.
No matter how much you earn, paying more tax is not pleasant. And the pittance most people classed as ‘battlers’ contribute to the tax income overall is nothing in comparison to how much the so called ‘rich’ who have generally worked harder to get where they are adding to the pie.
How many of the bloggers making such sweeping statements pay 40K of tax a year? And these same bloggers would have the hide to say more should be paid by those who already do pay more? Get a grip.
You should just say thank you for giving so much and be on your merry way and stop making dimwit comments.
If you fail to understand it’s because you lack the capacity. The most dimwitted thing is your statement about ‘donations’. Nobody likes to pay extra tax, but the point everybody with half a brain is trying to make- is that in the grand scheme of things this is meagre adjustment, and money matters less to people with that sort of income. Do you really think someone would rationalise their purchase of say an Audi over a Mercedes because of price?
It’s funny the wankers that criticize this don’t offer any sort of better alternative- just like to contribute their 0.000002c
Look, it sucks but it had to be taken from somewhere, and it’s better than completely crippling low income earners.
Off your High Horse Flying High.
PAYE contribute the lions share of tax i.e average joes on 50k a year and also pay disproportionately large amount of tax compared to self employed and high income earners.
They don’t have the tax breaks that are available to the affluent. I know many good honest hardworking people on 50k a year. Howard done a good job in his term ensuring he got blood,sweat and tears for 50K.
As a percentage of total income the rich contribute less to the tax take. Also if u take GST into account the rich are also in front in this regard as well.
Flying High u really are an idiot. Just be greatful u can afford a luxury car u cretin.
In the scheme of things, this increase is pretty negligible. A $10,000 increase on a 911 Carrera S probably doesn’t matter when you’re spending over $230,000. But where does it end? Australians already pay way too much for cars that cost a fraction in the US, even accounting for currency differences. You can pick up a 911 CS in the States for US$83,000 – about A$88K. Disregarding the regular importer justifications for this huge discrepancy (to do with equipment specifications, shipping costs etc), most of the difference is because of tax!!
PoisonEagle Says:
May 13th, 2008 at 3:51 pm
Nobody likes to pay extra tax, but the point everybody with half a brain is trying to make- is that in the grand scheme of things this is meagre adjustment, and money matters less to people with that sort of income.
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And the point everybody with a whole brain is trying to make is that it is a meagre adjustment to an already exhorbitant amount of tax being paid. Can you et that through your head?
PoisonEagle. Meagre Adjustment you say. When next you buy any new vehicle go and give the ATO an extra 8% on the purchase price (it is all proportionate right?) and see how meagre it is. It is the only way your dumb post could be vindicated. I am sorry, but whilst this country has a $21,000,000,000 surplus there is NO need for extra cash. It is a populist tax that has been put in place so that the govt can say ‘we are doing something’. One does not need to offer an alternative in such circumstances
RealCars. Where do you get off making dopey comments like that? Everyone has the same tax breaks available to be used – they are there for anyone for given circumstances – no one is going to stop you. The same rules apply across the board.
At the end of the day it comes down to not what ‘percentage’ of your income did you pay in tax, but how many ‘$’ did you pay. Not to mention how many benefits did you also receive from the govt already being on a lower income. Benefits not available to the ‘rich’.
And that my friend is an argument you cannot win. So best for you to stay off your high horse before you fall down and break your neck.
btw I didn’t say I can afford a luxury car – however the notion of anyone paying even more tax than they already do in this very highly taxed country – and then getting told we are going to slug you even higher Luxury Tax + GST (tax on tax) really is immoral.
its just rubbish the only way i will pay that tax is if i can at least donate it to a bettter cause than swans salary it just a big jinx no other countrie is penalised as much as oz for being rich
I think the car manufacturers should insult the Government back by reducing all their car prices $1 below the threshold.
SteveC…. lining up for his Porsche
We can only dream Steve C, If only!
There are no rational reasons for spending > $55K for a car. The only “reasons” are purely emotional. You can buy a main stream Accord, Camry, Lancer etc. that will on all practical considerations do the same job as a BMW 3 series or a Mer C200. If you have sufficient money & the “desire” to spend (waste) such money on a car, then go ahead & do so, but I for one thinks its a good idea to divert some of your money towards developing our fine nation.
Buying cars that cost more than $60K is an emotional driven choice. Accords, Camry’s & Lancers do in practical terms all that these cars can do. There are no rational reason for paying 2 to 3 times for something that fundamentally completes the required tasks no better, unless of course the task includes impressing everyone else sat in the traffic jam. The purchasers of exclusiveness, should be pleased that the tax has been increased for this makes their choice more rational, at least in their terms.
Many of the so-called luxury cars sold are BMW 320 (an underpowered 2 litre engine), Merc C-200 (an underpowered 1.8 litre engine) and Audi A4 (an underpowered 1.8 litre engine). Motoring jounalists should do Australians a favour by informing them just how badly underpowered and over-priced these cars are. If the increase in tax prevents some people from buying these cars, it would be a good outcome.
Merc charges $1,900 for metallic paint and $2,500 for delivery of the car. Why do people pay these and yet complain about tax?
That’s a very good point about the other charges, Tony.
But I don’t agree the cars you describe are badly underpowered. Check the back pages of WHEELS and see for yourself.
I was going to say the same Golf but got up to make some Miso soup………
Maybe he means for the 50k you can spend on them you can have
a local priced performance car less tax and charges on the options!
Me Ill pick a good second hand Euro performance car for the same money over any of the local stuff.
LUXURY TAX FOR THE RICH EH. I EARN AROUND 50 GRAND A YEAR BUT THERES NO WAY I CAN AFFORD EVEN THE CHEAPEST OF NEW CARS. I HAVE TO PAY ANOTHER TAX CHILD SUPPORT AT AROUND $9000 A YEAR KINDA CUTS OUT ANY NEW PURCHASE. I’D BE HAPPY FOR EVEN THE CHEAPEST KIA. SO MUCH FOR THIS GOVERNMENT HELP THE AVERAGE AUSTRALIAN, THEY’RE ONLY HELPING THEIR OWN POCKETS. REMEMBER THEIR PAY RISE AT 30% WE ALL HAVE TO FIGHT JUST TO KEEP OUR OWN AT 4%. WHEN WILL ALL OF YOU WAKE UP AND REALISE WE ARE ALL BEING RIPPED OFF BY THESE PEOPLE