Luxury car tax threshold rises, FCAI condemns ‘poor tax’

For the fiscal year 2022-23 there has been a big leap for the luxury car tax threshold for fuel-efficient vehicles compared to other vehicles, but the 21-year-old tax remains the target of criticism.

From July 1, the threshold for fuel-efficient vehicles will increase by 7.6 percent. $ 84,916For all other vehicles, it rose just 3.9 percent $ 71,849.

A fuel-efficient vehicle, as defined by the Australian Tax Office (ATO), is one that consumes fuel that does not exceed 7.0L / 100km in a combined cycle.

LCT 33% tax remains on the amount of the final retail price (including options, accessories, dealer delivery and GST) of a vehicle above the ATO threshold.

The Federal Chamber of Automotive Industries (FCAI), the industry’s top body, has again called for the abolition of luxury car taxes and replacement with road-user charges.

“The problem with the luxury car tax is that it’s still a very poorly designed tax,” said FCAI chief executive Tony Weber.

“It fails the basic rules of taxation: equity, efficiency, simplicity এর it has no economic merit as a tax, whatever.

“Another problem with the luxury car tax in this country is that it is a tax that was introduced long ago and was designed for the luxury car tax.

“And because historically the threshold has not been properly set, it now imposes a tax on cars, which many people rightly argue is not a luxury with products like the Kia Carnival.”

“The only thing that is going for it is that it raises revenue and does it in such a bad way. It’s a tax on security features, it’s a tax on low-emission technology.

“I think the tax should be abolished, it’s as simple as that.”

Mr Weber pointed to the benefits of parking a safer car in Australia, arguing that safer, newer vehicles on the road and less old vehicles would affect government health spending.

The FCAI has repeatedly proposed road user charges to replace “inefficient” and “old taxes”.

“[A road user charge should be] Technology-neutral, applicable across the country, and eliminates a raft of taxes on both motor vehicles and drivers, ”said Mr. Weber.

“This includes luxury car taxes, the amount of tariffs that still exist, stamp duty, registration fees, license renewal fees – there is a tax, and let’s sit down with the government and design it so that it can be implemented in a way.” That it is not backward and does not impose a heavy burden on those living outside the region and in regional Australia. “

Some states have announced that they are implementing road user charges, albeit only for electric vehicles and plug-in hybrid vehicles.

Victoria, for example, has introduced a controversial road user charge to compensate for the loss of fuel excise revenue due to more drivers switching from internal-combustible vehicles.

The previous South Australian government imposed similar taxes, but the Labor government, led by newly elected Peter Malinauskas, moved to repeal the state’s mileage charges.

ATO has long maintained the distinction between so-called fuel efficient and other vehicles when it comes to LCT, the difference between the two is usually close to the $ 15,000 mark.

From 2016 to 2020 the threshold for fuel-efficient vehicles was stable, and even other thresholds have increased exponentially. This is the largest increase in the threshold in a decade.

LCT was introduced on July 1, 2001 as a 25 percent tax. In 2008 the tariff was raised to 33 percent.

Neither party has plans to change or repeal the LCT in this year’s federal election.

The only vehicle tax proposals on the winning Labor Party note were to exempt electric, plug-in hybrid and hydrogen fuel-cell vehicles from the fringe benefit tax if they were provided through the employment system under the fuel-efficient vehicle LCT threshold, as well as a percentage exemption. Import duty