Luxury brands insulted by tax rise
May 13th, 2008 33 Comments
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.
