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Luxury car tax increase defeated in the Senate

Rejoice luxury car fans. The proposed increase in the Luxury Car Tax from 25% to 33% has been scrapped, when it was defeated in the Senate today.


The Opposition, and Family First Senator Steve Fielding, voted against the bill today, which sees the LCT rate remain at 25% for vehicles over $57,000. Yesterday, Senator Fielding called for changes to the bill to make it fairer for farmers and tourism industry workers. Today however he sided with the Opposition and shut down the bill.

"The Government could do something if they wanted to to get this measure through," said Senator Fielding. "There's no way that Family First can vote for a bill that's going to put up a tax for farmers and tourism, that's just crazy. They're already doing it so tough at the moment."

Already, industry figures are leaping for joy, with a flurry of press releases and new pricelists hitting our inbox.

For example, the President and CEO of Mercedes-Benz Australia/Pacific, Mr Wolfgang D Schrempp, has welcomed the decision and issued this statement.

"This is a fantastic outcome for our customers, the environment and road safety. We are always open to work with the Government and all stakeholders on environmental and road safety initiatives that will benefit the whole community. It is unfortunate that we as an industry had to go through a process in opposing this measure when the opportunity was always there for a good public policy outcome," Schrempp said.

The Federal Chamber of Automotive Industries chief executive Andrew McKellar has welcomed the Senate's decision and says the tax increase, was contributing to a drop in sales.

"In August sales were down 19 per cent so it has certainly hurt the market," he said.

Now, though, comes the paperwork nightmare. Dealers have been collecting the extra tax until a decision had been reached. How long it will take for that money to flow back to customers will remain to be seen. And whether this, combined with the latest interest rate cut, will see a spike in luxury car purchases will also be interesting.

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