MTA appeals to end redundant luxury car tax

The Motor Traders Association of NSW has appealed to end the luxury car tax (LCT), calling it ‘redundant’, to promote widespread electric vehicle adoption.

The LCT was introduced in 2001 to encourage people to purchase locally-made cars. However, Australia hasn’t manufactured any cars since 2017, making the LCT unnecessary.

A side effect of the LCT is that it made EVs more expensive when EV ownership should be encouraged and made accessible.

The LCT is an obstacle to the uptake of EVs in Australia as a substantial number of vehicles including models from Kia and Hyundai fall in the higher price bracket, making them subject to the LCT.

The LCT is a tax upon a tax, as cars incur the GST and then the LCT is added to cars valued over $84,916.

This threshold includes GST and applies to fuel-efficient car retail prices. For cars that are not fuel-efficient, the threshold is $71,849.

CEO of MTA NSW, Stavros Yallouridis said, “The abolition of the luxury car tax is crucial in promoting the uptake of EVs and fuel-efficient vehicles in Australia. By removing this tax, we will encourage consumers to purchase cleaner and more efficient vehicles.”

By abolishing the LCT, particularly for fuel-efficient cars including EVs, the adoption of EVs is encouraged and will promote the use of fuel-efficient cars in Australia.

To necessitate the nation’s transition to EVs, the MTA NSW is calling for accelerated depreciation on zero and low-emission cars.

Mr Yallouridis clarified that while the government has targets to increase the number of zero and low-emission cars in their fleet “the increase will come from private fleet purchasers, such as limo services and taxis”.

“To achieve the Federal Government’s targets, there needs to be a sharp increase in the adoption and sale of EVs. Incentives to have private fleets turning over their stock would stimulate the used EV market and increase the number of newer EVs on the road,” he said.

MTA NSW is also appealing to the federal government to assist small and medium-sized businesses respond to the challenges of transitioning to EVs by offering tax concessions and infrastructure investment.

“Our automotive industry is made up of mostly family-owned small businesses which already have very thin margins, and the cost of updating their workshops, charging infrastructure, and putting their employees through the necessary skills training will be costly and inhibitive,” Mr Yallouridis said.

“With ambitious targets on the horizon, the time for action on EVs is now. By abolishing the LCT, providing incentives for private fleet purchasers, accelerating the depreciation of low and zero-emission vehicles, and offering business tax concessions for EV infrastructure investment, we can encourage more widespread adoption of EVs and support the growth of the Australian automotive industry.”