Updated 09/07/2015: Further clarification around luxury car tax thresholds and percentages was added in below.
The Luxury Car Tax (LCT) is “absolutely an unfair tax”, says Audi general manager of corporate communications Anna Burgdorf.
The LCT, which was implemented in Australia on July 1, 2000, was designed to protect the local car industry and slug buyers of ‘luxury cars’ with a 25.0 per cent tax for any amount above $57,180.
The tax rate is now 33.0 per cent and the threshold is $63,184, or $75,375 for fuel efficient vehicles that use less than 7.0L/100km.
Given the recent fast-paced demise of the local car industry, moves to reduce or remove this tax haven’t been as swift.
Burgdorf voiced her concern about the existence of the tax, saying: “If we are successful in having the luxury car tax reduced, removed, changed over the next couple of years, I think there is certainly much more opportunity for us. In general, manufacturers believe it’s not a tax that is benefitting customers”.
Burgdorf was speaking with us at the launch of the new Audi TT Roadster in Victoria this week.
In real terms, the price of an Audi A6 allroad consists of over $8000 in LCT, while the Audi S8 contains a whopping $50,000+ in LCT. This extra money paid by consumers is passed directly on to the government, with Audi receiving no monetary benefit.
According to statistics published by the Australian Tax Office, income from the LCT has increased by over 100.0 per cent since the implementation of the tax in 2000, indicating that popularity of ‘luxury cars’ has increased during this period.
“If the government is serious about better, less expensive vehicles for Australian consumers, there’s a really clear way to do that — and that’s to reduce or remove the LCT,” Burgdorf said.
“And if that happens, what you’ll find is probably an example more like North America or the UK where premium cars have a much larger share of the market because they’re automatically much more affordable for consumers.
“So now that all the local manufacturers are gone, aside from making money for the government — what’s the point in that tax?”
While Audi has an agenda to push, given its skew toward premium and luxury vehicles, a company like Toyota is also affected with 22 of the manufacturer’s models falling into the ‘luxury car’ category — despite the fact many wouldn’t consider an entry-level Toyota Landcruiser as a luxurious vehicle.
The question is, why should manufacturers of vehicles deemed as luxurious be penalised by a tax originally implemented to support the local car industry? Do you think it’s time the government sat down and implemented a long term plan and strategy to phase out the LCT?