At the recent launch of the BMW 318d and BMW 320i, BMW Australia's managing director Phil Horton described the luxury car tax (LCT) as nothing more than just another tax on Australian motorists.
Mr Horton, who comes from the UK and was previously in charge BMW Middle East, has been at the helm of BMW Australia since February last year and has so far found no real justification behind the LCT’s existence.
“There seems to be no real substance or credibility behind the fact that once you reach a certain price band (you pay LCT), which is now in a relatively low level not just for us but for Toyota and other volume manufacturers” Horton said.
The luxury car tax adds a 33 per cent price hike to vehicles that exceed the current $57,466 threshold. The additional payment is the GST-exclusive value that exceeds the set threshold. Fortunately, vehicles that have a combined fuel economy figure of less than 7L/100km have an increased threshold of $75,375.
Even so, the $75,375 figure is no comfort for buyers of many BMW models (3, 5, 6 and 7 Series as well as X3/5/6), which are mostly affected by LCT. Mr Horton believes the LCT should be scrapped for a more measured approach that focuses even more on fuel efficiency and CO2 emissions.
“Replace it with something which is maybe more focused on fuel efficiency. You then start to steer consumer behaviour towards lower emissions and more fuel efficiency and maybe that will happen over time”.
Despite his dislike of LCT, Mr Horton left his biggest criticism for the Australian federal and state governments, which he described as taking revenue from Australian motorist without much return.
“Quite frankly I think the government in Australia, the way that they tax the Australian motorists, in my perception, (provides) very little return of those massive revenues that they get, in terms of things like improving road infrastructure. It’s a scandal.”
Heads of other European car manufacturers have also lashed out against LCT over the years but given the federal government’s desire to provide a budget surplus, it’s unlikely LCT is going to go away anytime soon.