Luxury Car Tax a ridiculous shambles
June 25, 2008 by George Skentzos
The Victorian Automobile Chamber of Commerce (VACC) has issued a statement today labelling the proposed Luxury Car Tax (LCT) a ridiculous shambles.
Under the Rudd Labor Government, the LCT is set to increase from 25 to 33 percent commencing July 1 – irrespective of whether it has passed Parliament or not.
The Federal Opposition has used its majority in the Senate to refer the Bill to a Committee that is not due to report until at least August 26 2008; however the new LCT increase will come into effect regardless.
As a result, the VACC has urged that the Government reconsider its July 1 implementation date.
“The LCT is to increase without the approval of the Parliament and, as a result, new car dealers are placed in an intolerable situation in having to apply a tax that is not yet law, and may not pass the Parliament when the Bill is returned.”
“Car dealers are faced with the ridiculous situation of having to say to customers –‘You can pay this tax now, but if the legislation is defeated we’ll give you a refund on the amount later’. Or, ‘if you don’t pay this tax, and the legislation is passed, we’ll get the tax off you later on’.”
VACC Executive Director David Purchase has also advised that potential buyers in this situation have every right to say ‘it is not law and I don’t want to pay’.
“Car dealers are asking why they should collect the tax, when it is not yet law. They are furious the Government is prepared to risk their livelihoods in business by bulldozing a tax increase through and pre-empting the outcomes of the Parliamentary process.”
Mr Purchase also regrettably acknowledges that that only segment of the local vehicle manufacturing industry which is growing or maintaining sales is caught up in the middle of this nonsense.
“The Government has failed to consult with the industry before introducing this Bill and as a result created an unworkable mess,” Mr Purchase said.
Print it: 
How is a retroactive tax even remotely constitutional?
Some of us are tax collectors for the GST already. Same difference really!
Just another cash grab by the Labor Government that supposedly were going to make things better. Just like the alcopop tax which was nothing other than a huge cash grab.
Glen,
Absolutely correct.
And re alcopops, 70% of that market is “dark spirits”, ie rum & bourbon, and of that over 80% is 28 – 40 years.
Therefore over half of the market targeted is outside of the demographic of “teenage binge drinkers” which is supposedly such a problem. TAX GRAB!
But hey “Working Families” will somehow be better off??
It’s not the Rudd Gov’ts fault that the increase is not law.
Don’t get me wrong, I don’t support the increase.
What I do support is the right of a duly elected govt to do what it feels it needs to, without the pathetic interferance of those who have already been voted out of the Senate. To my mind, that’s actually bordering on a crime.
Hey Reckless
Look at it like this, why should the liberals let this tax go through. The Labour party didn’t campaign that they were going to increase the luxury car tax, they have no mandate from the public, same with the stupid money grabbing alco-pop tax, delay it as long as possible.
So far Rudd has reminded me of the Gallop government over here in WA when they came into power.
Election promises were of no tax increases and cutting back on government wastage and spending. Within a week of coming into government, “gee things are not so good” we are going to increase stamp duties and rates across the board, also as we speak the amount of money the WA state government has wasted on useless commitees and consultants is just beyond belief.
Of course Rudd is smarter than Gallop was, he is blaming those binge drinking kids and those rich bastards for forcing him to raise taxes. Of course it could be “inflation” that forced him to raise taxes or any of the other scarey words he likes to use to justify his hiking up taxes.
End result we will get the liberal proposed tax cuts this year, but end up paying more in other areas as Labour screws us everywhere else.
Stone, the reason the liberals should pull their heads in on this issue is that they were COMPREHENSIVELY DUMPED by the electorate.
Again I stress that my argument is not for or against the increase, but the childish, petulant behaviour of those who are already THROWN OUT.
I think the LCT threshold should have been increased to $80,000, which would then allow families to buy a decent car without this impost. State gov’ts, by the way, have their own version of the LCT tax – they call it stamp duty, and in a lot of cases it is at an increased rate over 50,000 or so. These thresholds should be the same as the LCT threshold.
The above thresholds and an increase in import duty of 10% would be good for the local motor vehicle industry, punishing the likes of Mitsubishi and Nissan in particular for not building here any more.
Here’s a thought:
If you can afford a car that will be affected by the luxury car tax, quit f*cking whining and pony up the extra money for the tax.
The LCT comes in at $62k, yah? You can get a perfectly reasonably car for under that amount.
Most of the cars over that price bracket are European or 4WDs. Euros cost a fortune to maintain and 4WDs cost a fortune in fuel. People are quite happy to fork out cash for these running costs, but bitch and moan over an increase in the initial cost.
The government is hardly taxing the needy here.
Reck, the stamp duty is tax on purchase on any car regardless of being a luxury car,
Reckless1, since when has any opposition party (coalition or ALP) ever just let the government of the day have a mandate if they didnot control the upper house. I dont recall any ALP senators voting for the GST, yet the Coalition was elected on that platform. Rudd was not elected on a “lets raise taxes” platform. Let the senate do its job and stop staring at that framed Kevin07 how to vote card before posting comments.
If the Rudd Govt was serious about climate change they would raise the Car Tax on gas guzzlers only.
My proposal on car tax rates
Use more then 15 litres/100km Raise it 100%
Use less then 15 litres/100km Raise it 50%
Use less then 10 litres/100km Leave it the same
Use less then 7 litres/100km Get a tax of 50%
Use less then 5 litres/100km Pay no car tax.
(Usages City cycle)
Dlr1,
You seem to know jack sh!t – at which election exactly did the Coalition get voted in on the promise of introducing the GST ???
You also seem to think that you are the posting police – is that something Liberal voters do? – think like Howard that they are in a position to dictate the conditions of posting on a forum?
Get a grip on reality.
And as a matter of interest, my electorate has been solid Labour for longer than the Coalition was in power, which means it didn’t matter how I voted at all, if it’s any of your business, which it’s not.
SamR, I like your idea. And incorporate a slow reduction in the brackets in order to encourage car makers to continually produce more efficient vehicles.
Reckless1,
the Coalition went to the 1998 federal election with the platform of introducing the GST. The current government didnot go to the electorate with their plans to raise any taxes. Get your facts straight. And my electorate has never had a liberal or national party member.
Lets see the extra money will go towards schools…. no ah hospitals…… no ah consolidated revenue…… YES as any tax like this it losses more than it gains
laurie
Never looked into this in any detail… are used car sales exempt from LCT?
If so, dealers should let their customer test drive a “Demo” version of their prospective new car purchase for a week or two then sell them a nice “Ex-demo” used vehicle!!
GTRMon – I’m inclined to agree with you on the “pony-up” thing – just in my nature to scheme!
GTRmon, its kicks in at $57k, not $62k.
Reckless1, how the hell does the opposition liberal party not have the right to oppose a tax they don’t agree with. What, do you want Australia like Zimbabwe, with absolute power held by one party? Feel free to vacate yourself from Australia to Zimbabwe if you disagree with democracy Reckless1, I hear their economy is going gangbusters at the moment.
I voted for Liberal, as did a large number of Australians, are you saying we can’t get represented in Australian parliament, just because more Australians voted Labor. The liberals didn’t can the LCT increase outright, they just want more research done into its affects, thats why it goes to a committee. And with the FCAI saying the tax is a shambles, I’m glad one party has some common sense to at least investigate what effects it will have on local industry.
CO2-based tax system is a nice system, but it’d never work because it would adversely hit less well off people who can’t afford to buy a new more fuel efficient car, and so have to stick with an older, second hand more fuel consuming car.
What annoys me with the LCT is how unfair it is when it comes to the car industry. Why don’t luxury boats have a tax, given that a luxury boat is a lot more extragavent than a more expensive car? Or small families that build 5 bedroom mansions with swimming pools, is that not a luxury?
I thought the combination of higher income tax, GST and stamp duty on cars were supposed to even out the system so that people who earn more can more tax and take some of the burden off lower income earners.
So much for encouraging people in Australia to try and do well in life and earn a bit more money, and so much for the environment. Lets make more fuel efficient european cars even more out of reach from australians. Good consistency KRudd.
I used to think Rudd is a smart person although I don’t like hime and didn’t vote for him, I have changed my view on him, he is just an annoying/rude person, pretending he’s smart. And Swan, wow…, don’t know why we have a low IQ ministor there in charge of the nation’s money.
The whole luxury car tax is one example what’s their meaning of helping working family. For those Rudd fans, shout out loudly you are happy to accept the tax increase, just as stupid as you ever voted for him.
While everybody is whinging about Rudd, remember that Howard propsed to remove the tax altogether at one point…but changed his mind at the last minute by raising the threshold by a couple of bucks.
I think with inflation the way it is the threshold should be raised to $100k. Base model Benz’s(german taxi’s) and Landcruiser’s (plenty of people buy these because they need them to tow with) are not luxury cars.
When the tax was implemented by Howard, $50k+ was a luxury car but these days you cant buy anything with decent safety features for a specific purpose under this threshold. If they need it so badly to fill the coffers? Fine! But raise the threshold to reflect inflation.
yeah,for thos who always remember what Howard did bad, come on people, let the history go, the past is passed. No one is saying Howard WAS good, but saying Rudd IS bad! Rudd is a smart pretender, that’s it!
Reckless do a little fact checking before you insulting other people its not hard really. Here is a little refresher so you don\’t make a fool of yourself again. Remember Google is your friend.
The funny thing is Genie, is that we are already taxed on luxury items. Ie if I buy a dingy to go fishing for $1000 I will be paying say $100 GST. If I buy a million dollar power boat I will be paying $100,000 tax. Guess what we don\’t need another tax on top of that. Thats the whole point of a consumption tax, you tax the rich more and its unavoidable, (except for all those cash in hand tradies).
Luxury car tax is just not needed anymore. Its simply another hey lets tax the rich because if they complain we can accuse them of being unAustralian and not supporting the Battlers.
By the way did anyone see anywhere in KRudd\’s election campaign that he would increase LCT, that he would increase tax on Alcohol, cause it was a big surprise to me. I get this feeling, while Krudd may have promised to give us these income tax cuts, we are just gonna get screwed everywhere else.
Not sure why this was missing, but here is the info on the GST. Facts are your friend.
http://en.wikipedia.org/wiki/G.....Australia)
There is a lot of moaning going on.
Fenno, that’s bullshit that you can’t buy a safe car for under $50k. The Mitsubishi Lancer (for example) has a NCAP 5 star rating.
There are plenty of reasonable cars available for under $50k. And cars slightly over $50k, say up to $70k don’t actually incur a huge extra cost, it’s only a 7% increase.
The LCT will hurt people buying cars up towards the $100k mark, and I really don’t have a lot a lot of sympathy for people buying a $100k and whinging about paying too much.
This whole concept that you can’t buy a nice, or safe or fuel efficient car for under $50k is crap. The LCT is a tax on luxury items, i.e. ones which are not a necessity to everyday living. If you want the more expensive car buy it and shut up.
But a lot of the safety and efficiency technology on the cars under 50k were developed on the more expensive luxury cars. The Merc S-Class is the best example of this. Many people have had their lives saved by technology from the S-Class without even buying it.
Crumple zones, Airbags, traction control and ESP, Collapsible Steering Columns, Pre-tensioning seatbelts, ABS braking, Brake assist, Three-point seatbelts and more. All of the cars under 50k with a 5 star safety rating owe that rating to luxury cars.
A much better option would be to tax the CO2 emissions of a car or stop wasting money in other areas of the economy.
All I can say to all you rich stooges is you deserve this tax ha ha.
I think it’s absurd that people think you can’t buy a decent and safe car for under $50,000. There are plenty. Maybe just none that you particularly like.
LCT is an odd tax that still exists, but, I generally think it should stay. Why don’t boats and mansions incur LCT? Maybe they should. I know I’d be fine with LCT on boats and other luxury items.
And since when did a government have to lay out every policy it’s going to introduce during their election campaign?
Again I support the alcopop tax since it’s not really a tax. It’s the removal of an exemption to bring it in line with the rest of alcohol sales. The only stupid thing the government did was to try and sell it as helping solve the youth binge drinking problem.
Anyway, stop complaining about the LCT increase. It’s gonna happen and when it does no one will really care. It’s impact on pricing won’t be that significant to the majority of Australians. The people who do want those expensive cars will end up just paying the extra few thousands of dollars for it anyway.
That’s the truth. Otherwise we would have had 10+ years of protest about LCT existing at all, but, no one seemed to care until this government decided to increase it a bit. Or did everyone not know that LCT existed until recently?
With the threshold so low on the LCT, I think that the people really hurt are those spending 60,000 on a car. For these people, even though a 7% increase only means a few thousand more to pay – these are the people who will change a decision based on a few thousand dollars. People buying the 100k and 200k cars – although they will winge about it – wont care about paying the extra 10-20k associated with the tax increase.
We just have a situation where the luxury car tax is tipping into the mid-priced car segment – because at todays prices, 40-70k seems to be the mid-priced domain.
LCT is simply ridiculous. Due to the LCT increase these decent car manufacturers will start noticing a decrease in Australian sales and stop importing some of their models to Australia. Innovative car manufacturers should be supported. Without LCT many average income earners would be able to afford a BMW for example.
Its ridiculous. Increasing the Taxes will decrease sales of luxury car models.
LCT has been and gone, for a 100,000 car it has only increased by a 1000 to 2000.
People still buy cars, there was an initial slump in august but on the way back up now