South Australian Treasurer, Tom Koutsantonis, has called for the abolition of vehicle tariffs and removal of the inequitable Luxury Car Tax.

AADA, along with the Federal Chamber of Automotive Industries (FCAI), has thrown its support behind Mr Koutsantonis’ call, which he raised at the COAG meeting of Treasurers in Canberra in early December.

The call to end tariffs makes particular sense as, from the end of 2017, there will no longer be a local manufacturing industry for the tax to protect.

FCAI Chief Executive, Tony Weber, said it was time this issue returned to the federal government’s agenda because both taxes artificially suppress the affordability of new vehicle technologies.
“The Luxury Car Tax, in particular, acts as a device to artificially inflate the price of vehicles offering the latest in safety and emission technologies,” Mr Weber said.

“The LCT is imposed at what can only be described as an arbitrary price level and doesn’t even pass the fairness test. Why is this tax imposed on the car industry when a raft of other luxury goods don’t get taxed the same way?”

Mr Weber agreed with the SA Treasurer’s view that, with the cessation of volume local vehicle manufacturing 12 months from now, an import tax on vehicles would no longer be necessary.
“The Australian new vehicle market is one of the most competitive in the world. Reducing tariffs and taxes provides manufacturers with further opportunity to bring their new technologies to market at even more affordable prices,” he said.

“Artificial market mechanisms like the LCT have a stifling effect on the flowthrough of important technologies like automated and electric vehicles.

“What we’re seeing now is a growing public awareness of the huge benefits these technologies can offer us; it’s refreshing to see calls for a review of inequitable taxes and charges like the LCT.”