Mercedes slams stamp duty increases on luxury cars

Fears are growing across the industry that other states may follow the precedents set by Queensland and Victoria.

The boss of Mercedes-Benz Australia, Horst Von Sanden, has slammed the proposal to increase stamp duty charges on cars over $100,000 as it could cripple an industry attempting to recover from the biggest sales slowdown since the Global Financial Crisis of 2008-2009.

“The Victorian stamp duty regulation is certainly something that concerns us and the industry greatly. We believe it’s unreasonable, it’s unwarranted. And we certainly will try everything we can to go against it (with) the Federal Chamber of Automotive Industries,” said Mr Von Sanden.

He said federal Luxury Car Tax was likely to be scrapped as part of the negotiations with Europe over a future Free Trade Agreement with Australia, but the stamp duty increases will now also need to be part of the discussions.

“With the European Free Trade Agreement negotiation we thought that … Luxury Car Tax might be on its last leg. Now this comes,” he said.

The stamp duty increases couldn’t come at a worse time for a luxury segment that for the past year has declined at a greater rate than the rest of the market due to a series of setbacks.

Political uncertainty in the lead-up to this year’s Federal election, tightening credit requirements, falling house prices, vehicle delays due to new European emissions testing requirements, and ships being turned around from Australian ports due to “stink bug” infestations, put the brakes on new-car sales.

However, since the Federal election, sales have bounced back across mainstream brands and luxury marques, although the recovery is yet to be seen in the monthly sale reports because while dealers are taking more orders the cars are yet to be delivered.

“We could immediately see after the federal election (there were) some positive effects,” said Mr Von Sanden. 

In the last two weeks, he said, Mercedes reported the highest order intake since 2017 – more than 900 orders per week, which amounted to a 50 per cent increase on the year-to-date average for 2019.

“When we think it’s turning good then some other people have some funny ideas which destroys (the market) again,” said Mr Von Sanden, referring to the stamp duty increases on vehicles priced over $100,000.

As Drive has previously reported, Queensland introduced an additional 2 per cent stamp duty – on top of the 2 to 4 per cent already applied to certain models – on vehicles priced over $100,000 from 1 July 2018, after announcing the proposal two days before the state election in November 2017.

Victoria currently charges 4.2 per cent stamp duty on cars below the federal Luxury Car Tax threshold of $66,331 and 5.2 per cent on the total cost of cars over this amount.

In its May budget the Victorian government announced from July 1 2019 the stamp duty on cars over $100,000 will increase to 7 per cent of their total value. On cars over $150,000 the stamp duty will increase to 9 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 per cent import tariff if the car is from Europe, 10 per cent GST and 33 per cent Luxury Car Tax on most cars 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.

In NSW, stamp duty is 3 per cent of the total cost on cars priced up to $45,000. On vehicles priced over $45,000 stamp duty is 5 per cent of the total cost, plus a $1350 fee.

In the lead-up to this year’s NSW election, opposition leader Michael Daley proposed a 7 per cent stamp duty on all cars priced above $100,000 to raise an additional $240 million “to help pay for nurses and midwives”.

The proposal did not come into force as the NSW government was returned to office, but it may resurface at a later date.