New calls to scrap Luxury Car Tax in Australia

The top end of town may be able to buy cheaper cars if the Federal Government gets its way.

There are renewed calls to abolish Luxury Car Tax -- which impacts more Toyotas than Mercedes-Benzes -- after the Federal Government announced sweeping changes to vehicle import laws today.

Under the proposed legislation, the Federal Government would allow private buyers to import new vehicles, in an attempt to keep prices low once Australian car manufacturing comes to an end in late 2017.

The car industry is fighting the proposal on the grounds it won't lead to more affordable cars for the masses and would reduce consumer protection for buyers of privately imported cars.

Instead, the scheme would only benefit the super-rich who can afford luxury models and exotic sports-cars, the industry lobby group says.

"If the government is serious about improving vehicle affordability, then it should abolish Luxury Car Tax," said Tony Weber, the chief executive of the Federal Chamber of Automotive Industries.

"It's fanciful to think this will bring cheaper cars to the mass market. Australia is already one of the most competitive markets in the world when it comes to new-car pricing -- except for vehicles impacted by Luxury Car Tax."

Consumers may not be afforded to the same protections offered under the Australian Consumer Law and manufacturers have no obligation to provide warranty

A 33 per cent Luxury Car Tax is added to vehicles priced above $63,184 and is indexed to inflation. On a $250,000 Porsche, at least $45,000 of the price is Luxury Car Tax alone.

"This policy is not going to benefit mums and dads buying mainstream vehicles, it will only benefit buyers of high-end vehicles impacted by Luxury Car Tax," said Mr Weber.

Motor Trade Association of South Australia CEO Paul Unerkov said that consumers may ultimately lose when importing vehicles privately and the Government should not give them a false hope of a better deal.

"Unfortunately, consumers may not be afforded to the same protections offered under the Australian Consumer Law and manufacturers have no obligation to provide warranty on privately imported vehicles or to service and maintain those cars," said Mr Unerkov.

The federal minister for major projects and infrastructure, Paul Fletcher, told News Corp Australia: "There is a considerable focus on consumer protection. What we've announced is a framework, clearly there is more consultation and detail to fill in".

When these privately imported new cars are eventually sold as used vehicles, the onus will be on used car buyers to check the bonafides of the vehicle online, to find out if it was imported privately.

Luxury Car Tax impacts Toyota more than brands such as Audi, BMW, Mercedes-Benz and Porsche

Under the draft proposal, there is no identifying feature on each vehicle, such as a compliance plate that highlights the vehicle was privately imported and may have different equipment and specifications to those distributed locally by the manufacturer.

"We are certainly open to further ideas about consumer protection," said Minister Fletcher.

The MTA's Mr Unerkov said: "While (the proposal) might look attractive on the surface, the savings are unsubstantiated; especially when the additional costs such as freight and import charges are added."

Independent comparisons show the cost of Australia's most popular cars such as the Toyota Corolla and Mazda3 -- both of which start at about $22,000 and are the same price they were in Australia 20 years ago -- are on par with the US and cheaper than Europe.

While there have been consistent calls from the industry to abolish Luxury Car Tax, it nets the Federal Government approximately $500 million each year.

Contrary to perception, Luxury Car Tax impacts Toyota more than brands such as Audi, BMW, Mercedes-Benz and Porsche because Toyota sells more models above the $63,184 threshold than do the German brands.

What are your thoughts on the Luxury Car Tax? Tell us in the comments below.