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Porsches are subject to four different taxes. Photo: Supplied
 
 
Dom Tripolone | Apr, 16 2018 | 0 Comments

Liberal Democrats Senator, David Leyonhjelm, has added his voice to the growing number calling to abolish a range of new car taxes.

Senator Leyonhjelm has said that excessive state and federal taxes has led to Australia fielding one of the oldest car fleets in the world, with the average age of a motor vehicle of 10 years.

There are currently a number of taxes applied to cars that are putting the brakes on new car purchases, with a large number of new cars incurring a five per cent tariff when there is no Free Trade Agreement (FTA) in place with the country of origin.

“Cars made in any country with which Australia does not have a free trade deal attract a 5 per cent import tariff, so more than $1,500 is imposed on entry-level Holden Commodores that are now made in Germany,” Senator Leyonhjelm said.

In contrast, after Australia signed an FTA with Japan in 2014, it lowered the price of a base Japanese built Toyota Corolla Ascent hatch to below the 2007 list price for the same vehicle.

There is also the Luxury Car tax (LCT) which is applied to all vehicles - as of 2018 - priced above $65,094. This tax is applied regardless of country of origin and is often applied to vehicles not associated with luxury status: a range-topping Toyota Kluger and all Toyota LandCruisers are subject to the tax, however, the upcoming $74,990 Ford Ranger Raptor ute - like all utes - is exempt from LCT as it is classed as a commerical vehicle.

The LCT contributes about $500m to the federal budget annually.

After these two taxes are applied then GST and state duties are added.

“Now add the GST, then state duties of around 3 per cent on top of that. This is quadruple taxation: a tax on a tax on a tax on a tax. It’s a good thing Australians love their cars so much because they are paying through the nose for them.” said Senator Leyonhjelm.

It is believed that the current negotiations for a free trade agreement with Europe will lead to the abolishment of the LCT. The FTA would also remove the five per cent tariff currently applied to many vehicles built in Europe including vehicles from the likes of Ford, Volkswagen and Mercedes-Benz.

Previously the former Infrastructure and Transport Minister Barnaby Joyce has stated that there is merit to removing or reducing tariffs in new cars. 

Mr Joyce told ABC radio in January, 2018, that the removal of tariffs required “discussions of cabinet and discussions of the expenditure review committee, but it’s something I think obviously shows merit”.

Despite the taxes, the Australian new car market is so far on track for a record year in 2018.

 
Filed under luxury car tax luxury cars
 
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