Toyota renews calls to scrap Luxury Car Tax as sales slip

AUSTRALIA’S biggest car maker Toyota has repeated calls for an end to Luxury Car Tax - as new-car sales slow down for the sixth month in a row.

Badge on the 2010 Toyota Camry Hybrid Luxury sedan.

AUSTRALIA’S biggest car maker Toyota has repeated calls for an end to Luxury Car Tax - after six months of sales decline and just one day after the Federal Government increased the threshold of the taxable amount which, in effect, trimmed about $500 off the price of cars costing in excess of $62,000.

Contrary to popular belief Toyota customers pay more in LCT than do buyers of Audis, BMWs, Mercedes-Benzes and Porsches and the like because Toyota sells more vehicles.

About 17 top-end Toyota models such as the Tarago people mover and LandCruiser four-wheel-drive are hit with the tax, which is now 33 per cent on every dollar of a car’s price above $61,884, after the Federal Government increased the threshold from $60,316 on July 1.

Toyota’s executive director sales and marketing Tony Cramb said LCT should be abolished

because there is “no equivalent tax on items such as antiques, yachts, motor boats and jewellery”.

“Australian motorists are already heavily taxed with GST, stamp duty and registration fees when buying a new car, as well as road tolls and a hefty tax on fuel,” said Mr Cramb.

“New-vehicle buyers should not be singled out to pay the additional burden of a so-called luxury tax.”

When the LCT was introduced in July 2000 the rate was set at 25 per cent on every dollar above $55,134.

The LCT was increased to 33 per cent in 2008 by the then Labor Government, with an exemption for fuel-efficient cars (those that use less than 7L/100km) up to $75,375.

“Toyota’s opposition to this tax and our call for its repeal is consistent with the recommendations of the Henry tax review,” said Mr Cramb.

So far, only five car makers have announced new price lists that pass-on the savings due to the higher LCT threshold.

Toyota, Porsche, Volvo and Nissan’s luxury brand Infiniti have trimmed up to $500 off the cost of cars impacted by LCT but Audi, BMW and others are yet to follow suit.

Representatives for both Audi and BMW have so far indicated those brands will add equipment to their cars rather than pass-on the $500 saving.

With a massive budget deficit to contend with the Federal Government is unlikely to wind back or scrap the LCT.

The Federal coffers received a peak of $483 million from LCT revenue in the 2010-11 financial year but the amount fell to $435 million in 2011-12 and the forecast revenue for 2013-14 is $450 million.

However, over the next two financial years, the Federal Government has budgeted on a 15 per cent increase in Luxury Car Tax revenue, to $520 million in the 2015-16 financial year.

The call to scrap LCT comes as official figures for June are expected to show the new-car market posted its sixth month in a row of sales decline.

June is typically the strongest month of the year for new-car sales but the total of 118,309 deliveries was down 0.4 per cent compared with the same month last year, and down 2.4 per cent year-to-date, which is in line with the retail spending slump.

However, Australians are treating themselves to a record number of luxury cars, despite the LCT.

Sales of Audi are up by 19 per cent in the first six months of this year, BMW deliveries are up by 9 per cent while Mercedes-Benz is leading the luxury market with the most number of cars sold among the trio, with sales up by 14 per cent.

As reported earlier, only four of the Top 10 car brands posted sales gains in June as utility vehicles filled two of the Top 3 spots.

This reporter is on Twitter: @JoshuaDowling