The car industry plans to use a precedent set by tobacco distributors in 1997 in an attempt to stop state governments across Australia from imposing an additional stamp duty on luxury vehicles.
In a rare show of unity, the Australian Automotive Dealer Association (AADA) and Federal Chamber of Automotive Industries (FCAI) are meeting with senior legal advisors in Melbourne this afternoon (Friday) to discuss a possible High Court challenge to increased stamp duties on vehicles priced over $100,000 in Victoria and Queensland – and put forward by the NSW opposition earlier this year.
The stamp duty increases are in addition to 5.0 per cent import tariff on cars from Europe and the UK, 10 per cent GST, and 33 per cent federal Luxury Car Tax on most cars over $66,331.
According to the precedent set in August 1997 – legal challenges known as Walter Hammond and Others versus NSW, and Ha versus NSW – the states cannot impose discriminatory duties.
In that case the court ruled the state could not impose an excise duty on goods sold in Australia and the Commonwealth then asserted its powers to impose an additional tax on tobacco.
According to federal government records: “Section 90 of the Constitution vests the Commonwealth with the exclusive power to impose duties of customs and excise. A series of High Court decisions have defined excise duties to be any levy imposed upon goods at any point in the production and distribution chain. This has had the effect of preventing the States from imposing any form of sales tax on goods.”
Queensland increased the stamp duty on cars over $100,000 from July 2018.
From July this year the Victorian government wants to introduce a flat 7.0 per cent stamp duty on the total cost of cars over $100,000 and 9.0 per cent stamp duty on the total cost of cars over $150,000.
These rates would give Victoria the highest stamp duties on cars in Australia.
“We are continuing our discussions with senior legal counsel and we are ruling nothing in and nothing out at this stage,” said David Blackhall, the CEO of the Australian Automotive Dealer Association, which represents 1500 dealer groups covering 3500 new-car showrooms and more than 60,000 employees nationally.
Tony Weber, the chief executive of the Federal Chamber of Automotive Industries, says the extra charges could slow the “trickle down” of advanced safety and fuel efficiency technology to more affordable vehicles.
“Every time that vehicle prices are increased through taxes and charges, it puts the technology that drives safety and environmental improvements further and further away from the reach of Australian consumers,” said Mr Weber, who will among those attending the meeting with lawyers in Melbourne on Friday afternoon.
As CarAdvice has previously reported, figures show Toyota customers pay more in Luxury Car Tax than do buyers of most prestige brands.
Earlier this week, Mr Blackhall said that if the stamp duty increases on luxury cars weren’t stopped, they could spread to other states.
“Treasurers are treasurers, once they see one of their counterparts dip into the car buyer’s wallet, our concern is it will become contagious and other states might get the same idea,” Mr Blackhall said earlier this week.
In its May budget the Victorian government announced from July 1 2019 the stamp duty on cars over $100,000 will increase to 7.0 per cent of their total value. On cars over $150,000 the stamp duty will increase to 9.0 per cent of their total value.
For example, on a $100,000 car the stamp duty is currently $5200, from July 1 it will be $7000. On a $150,000 car the stamp duty is currently $7800, from July 1 it will be $13,500.
Both stamp duties are in addition to 5.0 per cent import tariff if the car is from the UK or Europe, 10 per cent GST and 33 per cent Luxury Car Tax on the amount over $66,331.
The budget is yet to go through the Upper House in Victoria. However once approved, the increases mean Victoria will have the highest stamp duty on motor vehicles nationally.
West Australia is the next highest, with 6.5 per cent stamp duty on new cars priced over $50,000, followed by Queensland with 6 per cent stamp duty on certain cars over $100,000.
This reporter is on Twitter: @JoshuaDowling