[JoeT]

Industry Protests Luxury Car Tax Hike

Jonah Wigley
12 May 2008
www.carsguide.com.au

Carmakers have spoken out strongly about the jump in Luxury Car Tax.
In his first Federal Budget, Federal Treasurer Wayne Swan has implemented a luxury tax hike that will affect cars priced at $57,000 and above.

In a budget that claims to protect lower income earners, the new car tax jumps from 25 to 33 per cent and will precipitate a price rise in around 105,000 cars yearly.

Luxury manufacturers unhappy with the government’s tax hike, argue that it is their investment in new technologies that makes cars safer and greener - and that mass market brands enjoy the benefits of such investment without having to fund research and development.

Mercedes-Benz Australia spokesman David McCarthy can’t understand why the Rudd Government has focussed on cars only. “You can go out and buy a one million dollar speedboat and a two million dollar helicopter and they are not subject to anything but GST.

“The government’s mantra is working families. Do they assume that you’re not a working family if you can afford a $57,000 car?”

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Car Tax: How Much More Will You Pay?

Neil McDonald
14 May 2008
www.carsguide.com.au

Just exactly how much are you going to pay for a prestige or luxury car now under the new rules?

Imported cars are hardest hit by the new LCT threshold but some of our homegrown brands also suffer.

Local
Ford Territory Ghia Turbo $65,986 (old price $65,490) + $495.82
FPV GT Pursuit $58,041 (old price $57,990) + $51.38
FPV GT E $78,167 (old price $76,990) +$1147.30
Holden Statesman 3.6 $61,219 (old price $60,990) +$229.16
Holden Caprice $68,634 (old price $67,990) +$643.97
HSV Clubsport $65,107 (old price $64,660) +$446.64
HSV Grange $86,324 (old price $84,690) +$1633.60

Imports
Audi A4 2.7TDI $68,539 (old price $67,900) +$638.64
Audi A8L W12 $341,933 (old price $326,000) +$15,993.45
Bentley Continental Flying Spur sedan $370,533 (old price $353,000) +$17,533.45
BMW 130i Sport $59,005 (old price $58,900) +$105.30
BMW 760Li $363,119 (old price $346,000) +$17,118.64
Lexus IS250 Luxury $80,296 (old price $79,000) +$1296.41
Lexus LS600hL $243,422 (old price $233,000) +$10,422.34
Mercedes-Benz C200 $65,794 (old price $65,309) +$385.00
Mercedes-Benz S500 $273,940 (old price $263,698) +$10,242
Rolls-Royce Phantom $965,837 (old price $915,000) +$50,837.16
Porsche Boxster $112,400 (old price $109,300) +$3100
Porsche 911 Carrera S $237,700 (old price $227,600) +$10,100

New Car Manufacturing Plan For Australia On The Way ​

Federal Treasurer Wayne Swan​

 

[Clownzilla]

Well, this is just more proof (lol, like we need more) that socialism is alive and well. More and more people and governments want to punish the rich for being successful. It's getting to the point to where striving for success is actually hurting people worse than working half-ass and letting the government take care of you. It's becoming more of a sad world day after day.

 

[tgagneguam]

In a budget that claims to protect lower income earners, the new car tax jumps from 25 to 33 per cent and will precipitate a price rise in around 105,000 cars yearly.

This sentence needs some attention:

In a budget that [punishes high wage earners for working and being successful], the new car tax jumps from 25 to 33 per cent and will precipitate a price rise in around 105,000 cars yearly.

There, that sounds more in line with the actual spirit of Australia's luxury car tax. Unfortunately, I sense the politicians in Washington are getting some ideas.

 

[CJ Thunder]

This only goes after the rich for no damn reason. It is classist....don't they have a damn surplus...

 

[jbernie]

This sentence needs some attention:

In a budget that [punishes high wage earners for working and being successful], the new car tax jumps from 25 to 33 per cent and will precipitate a price rise in around 105,000 cars yearly.

There, that sounds more in line with the actual spirit of Australia's luxury car tax. Unfortunately, I sense the politicians in Washington are getting some ideas.

105k vehicles is around 10% of all vehicle sales in Australia.

 

[Rick_VT]

Well if you can afford $68,000 for a new Holden Caprice is another $640 really goin to make that much of a difference?? Now i know it just seems like a quick easy fix to just tax the rich more and most Governments do it, i dont agree with the Govt for doin it just for the sake of revenue raising either thats wrong, it woudl be nice if the Govt used the money from this and put it back into better roads and maybe use it to help the carmakers bring safer technologies to market.

But i bet it just ends up in Govt revenue

 

[Slick_Holden]

The only cars it hits bad are the $100,000+ cars.

Past that take the extra $80 per week you get in the $150,000 and stick that into your new car. There that covers it.

Honestly if i have money to buy new in the luxury sector, I'd go Grange, And i have to pay $1633.60 more. Dam my brakes would cost $2000 per rotor!.. $7000 for supercharger, Doubt I'd give a toss really.

Or best is, I get a $2000 rebate to stick my car on LPG.. The tax disappears again.


Don't quote me on this, But i herd something was coming out of this extra tax, A $1000 rebate on new cars with LPG fitted?.

 

[BBDOS CV8]

Considering during the last thirteen years of the conservative government it's estimated that the rich doubled their overall position, due to property value increases, tax handbacks and negative-gearing property ownership concessions, lurks added or perpetuated and concessions on private health insurance and private schooling, this is small potatoes.

And as noted, they are still getting personal income tax cuts which more than offset the cost. If it were me, I would have gone further. This actually encourages people to buy locally-madel cars, nearly all of which are under this threshold.

Guarantee you that Holden, Ford, Toyo all bring out 'luxury tax specials' priced $50 below the threshold.

If the Liberals had won this election, their promise was to give tax cuts to anyone except low-income earners who probably need them most in light of fuel, food, rent, mortgage cost increases. It isn't right or fair.

Actually the one thing I disagree with is they've actually halved the tax rebate on LPG vehicles, which I would have doubled.

 

[mikmak]

When are you running for election again BBDOS? Count on my vote.:

This is pretty much in line with what the Labor Party ran their campaign on. It obviously had something to do with Kevins "charisma" too, because Beezly [sic] tried on the awkward sounding "Ease the Squeeze" to no avail. It is good t see that they have delivered. The next step is to get individuals and families to exercise personal economic conservation. Rather than buying property and vehicles at the upper limits of their credit, they need to buy something that allows them a little padding in their budget. Of course, that sort of response would be flagged on the news channels as a dip in consumer confidence.

"We aren't frivolous enough! Everyone panic!" :laugh:

Needless to say, my tax cuts wont need to contribute to any luxury car tax.

 

[Dr Terry]

Hi Guys.

I think KRudd & Wayne Goose are totally out of step here, as many expected of course.

Sure, make the rich pay some extra, but the $57,000 figure is ludicrously low.

Isn't this the same threshold that Hawke & Keating used when they introduced the luxury car tax around 20 years ago. So much for their much poilcy of indexation.

Dr Terry.

 

[mikmak]

I think I should have read the article a bit better. 57K (though a lot for me) is hardly indicative of a true luxury tag. Having said that, there are plenty of fine autos available for less. Perhaps it is just the term "Luxury" that is misleading.

noun: something that is an indulgence rather than a necessity

noun: wealth as evidenced by sumptuous living

noun: the quality possessed by something that is excessively expensive

Mind you, name a car that doesn't meet or have one of these criteria for under 57k (no commercial vehicles either

 

[mbukukanyau]

well, those socialists will never get satified with taxes, soon, it will be your shoes they want.

 

[winovin]

Regardless of whether one agrees with this policy, what is crazy is that the supposedly pro-environment Rudd government is still exempting 4WDs from the luxury tax.

The fact that 4WDs are exempt from the luxury tax is a key reason that their sales have grown strongly in Australia, despite high fuel prices.

NOTE: By 4WDs, I mean the majority of cargo-carrying 4WD vehicles in the Australian market, such as BMW X5, Land Rovers, etc. See definition at link below for clarification. Passenger based AWD vehicles are included in the luxury tax.

Why buy a BMW 5-series that attracts a 33% luxury tax, when the X5 attracts 0%?

Other markets price (for example) the X5 above the 5-series - in Australia, the pricing relationship between 4WDs and their sedan counterparts is inverted (to the rest of the world).

I think the revenue goal could have been met in a less market distorting way by imposing the 25% luxury tax on all vehicles instead of only non-4WDs.

http://www.ato.gov.au/businesses/content.asp?doc=/content/13288.htm&page=3&H3

 

[VB3.3]

I think this is much fairer than the additional 1% tax if you earned over $50K and did not have health insurance. Earning $50K in 1998 is not that same as eaning $50K in 2008. So if an offset to raising the medicare surcharge bracket to $100K is increasing the luxury car tax so be it.

How much in tax assistance has the motor industry grafted out of successive governments.

 

[Slick_Holden]

Tax cuts for up to $150,000. Toss in your expensive private cover and hit the public system, 2 ways to save money. Stil rebates for higher income people to go to private health cover.
The amount of savings to a $150,000 income would put under $50,000 to shame, They don't get that type of support back in there pockets?.
Really i don't see the so called rich getting ****ed here?.

 

[MonaroSS]

I love how, mainly the Americans, jump on that word 'socialism', like there are still reds under the beds. This tax is just a social engineering device. But it is not more nor less of a social engineering device than Bernanke at the US Federal Reserve adjusting interest rates, yet most Americans would think that is just a part of a free market business environment - bullcrap.

When Bernanke lowers interest rates it means little old men and women in retirement who worked hard for their life savings now have to earn LESS interest each year so that Banks and Wall Street Firms and other rich people can recover from some of their gluttonous and irresponsible investment strategies.

Why should retirees pay for speculators mistakes? That's socialism at it's worst. When a government uses socialism to take money from the rich and give to the poor at least like Robin Hood it is usually morally well intentioned. But to take money from the life savings of the mainly working class Greatest Generation who fought in WWII to give it to the rich is just criminal.

And worse still, the low interest is collapsing the US dollar and causing inflation (which is great for the rich banks and property speculators stuck with property they want to inflate back up in value) but it is seriously eroding the life savings of hard working middle and lower middle class retirees on top of their now lower interest dividend.

 

[MonaroSS]

I think I should have read the article a bit better. 57K (though a lot for me) is hardly indicative of a true luxury tag. Having said that, there are plenty of fine autos available for less. Perhaps it is just the term "Luxury" that is misleading.

noun: something that is an indulgence rather than a necessity

noun: wealth as evidenced by sumptuous living

noun: the quality possessed by something that is excessively expensive

Mind you, name a car that doesn't meet or have one of these criteria for under 57k (no commercial vehicles either

Of course you have to remember that the luxury tax only STARTS at $57K. If you car costs you $57,100 you are only paying 33% on $100 dollars, so it only starts getting into serious amounts well above $57K.

Also, remember that right now the Australian economy’s two main problems are that it's over heating from all the money our mining and energy sector is making from China and the high interest rates being imposed to counter the otherwise inevitable inflation such a ‘boom’ time produces.

If only those benefiting from the boom would put all their money in the bank as savings we would have no problem, but they are spending it. The two biggest items they spend it on are houses and cars. The higher interest rate is to lower spending on housing (which unfortunately also hurts those not benefiting from the boom) and a higher luxury tax on cars should slow spending there a bit too (but should include 4x4's).

If only the resource sector lobby were not so strong the best solution by far would be to impose a temporary windfall profits tax on the mining and energy companies to be paid into a special ‘future fund’ for loaning cheap money back to that sector when the next inevitable 'bust' time rolls around.....

 

[winovin]

I love how, mainly the Americans, jump on that word 'socialism', like there are still reds under the beds. This tax is just a social engineering device. But it is not more nor less of a social engineering device than Bernanke at the US Federal Reserve adjusting interest rates, yet most Americans would think that is just a part of a free market business environment - bullcrap.

When Bernanke lowers interest rates it means little old men and women in retirement who worked hard for their life savings now have to earn LESS interest each year so that Banks and Wall Street Firms and other rich people can recover from some of their gluttonous and irresponsible investment strategies.

The Fed only adjusts short-term rates. Other rates are set largely by inflationary expectations. The Fed has no power over these rates.

Also, the Fed is driven by the goal of maximising economic growth and promoting stable prices (minimizing inflation):

http://www.frbsf.org/publications/federalreserve/monetary/goals.html

The recent interest rate cuts in the U.S. have been driven by a desire to stimulate the economy and avoid an anticipated recession.

Note that the US Government just paid all taxpayers a $600 rebate, to encourage consumer spending.

And worse still, the low interest is collapsing the US dollar and causing inflation (which is great for the rich banks and property speculators stuck with property they want to inflate back up in value) but it is seriously eroding the life savings of hard working middle and lower middle class retirees on top of their now lower interest dividend.

The collapse in the USD has been driven partly by the US Administration's move away from a strong-dollar policy, but largely by the high trade and budget deficits that the US is running.

 

[winovin]

If only those benefiting from the boom would put all their money in the bank as savings we would have no problem, but they are spending it. The two biggest items they spend it on are houses and cars. The higher interest rate is to lower spending on housing (which unfortunately also hurts those not benefiting from the boom) and a higher luxury tax on cars should slow spending there a bit too (but should include 4x4's).

The RBA (Reserve Bank of Australia) raising short-term interest rates is not to lower spending on housing, but to reduce inflation.

 

[MonaroSS]

The Fed only adjusts short-term rates. Other rates are set largely by inflationary expectations. The Fed has no power over these rates.

Also, the Fed is driven by the goal of maximising economic growth and promoting stable prices (minimizing inflation):

http://www.frbsf.org/publications/federalreserve/monetary/goals.html

Please please tell me that you have not studied economics, I'm already too disillusioned with modern education.

How do you think they control inflation? There is no ‘inflation dial’ that they just turn this way or that. They effect inflation by indirectly controlling market interests rates, just as I said and they have effected the consequences which I enumerated, also just as I said.

The Fed, or more accurately the Federal Open Market Committee (FOMC), does not even adjust short-term market rates. They set the Federal Funds Rate, which is the rate that commercial banks charge each other on overnight loans among themselves. So the Fed has no direct power over what any market rate is. The Fed also controls the money supply, which means they buy and sell government securities, or other financial instruments like foreign currencies and gold. By doing this they can either dry up available money in the financial system or flood new money into it, which is referred to as tightening or loosening the money supply. This gives the Federal Reserve it's two main levers upon which to push or pull to effect market interest rates. They can usually flatten or steepen the yield curve of market rates as well as push them up and down, by manipulating the psychology of those who trade in the market place. While inflationary expectations are one influence on that psychology, there are plenty of others at work and at present those others have more sway than inflationary expectations.

The recent interest rate cuts in the U.S. have been driven by a desire to stimulate the economy and avoid an anticipated recession.

Note that the US Government just paid all taxpayers a $600 rebate, to encourage consumer spending.

The recent cuts by the Fed in the Federal Funds Rate were by their own admission not simply to avoid recession and stimulate the general economy. If you read the Fed FOMC Minutes you will see that the main driver has been to free up the frozen secondary markets for debt derivatives. If not for that, the Fed would have held pat and not lowered rates as much as they in fact point to potential inflation which they have put on hold any fighting of until after they free up the derivative debt markets.

The collapse in the USD has been driven partly by the US Administration's move away from a strong-dollar policy, but largely by the high trade and budget deficits that the US is running.

The US Administration via the treasury and Treasury Secretary has maintained a strong dollar policy all along. They have never claimed to have changed that policy. And the US trade and budget deficits have been running as they are for a very long time. In fact they were similar to now while the dollar was rising during the late 90’s. No the USD is falling for very different reasons than you believe.

The RBA (Reserve Bank of Australia) raising short-term interest rates is not to lower spending on housing, but to reduce inflation.

Again, where’s the ‘inflation dial’? Do you know what causes and defeats inflation?

Inflation is when prices rise. Prices rise because there is a greater demand than supply and two or more people will effectively, through open markets, bid up the price as both want the good or service and are willing to pay more. When money supply is loose and or it is cheap to borrow then there is a lot of cash that flows into the economy. Then you have more cash chasing the same amount of goods and services, prices bid up and you have inflation.

So to defeat inflation central banks attempt to dry up money supply and or raise interest rates. This means that either there is simply less money chasing the same goods and services, meaning there is insufficient funds to buy the goods and services and so inventories build forcing prices to fall, or money is too expensive to borrow and people are unwilling to go into debt to buy the goods and services, again driving down their prices.

The single main way for the RBA to make people unwilling to bid for goods and services in Australia is to force up interest rates as most housing loans in this country are variable and this instantly takes money out of the pockets of the average person. They stop buying unnecessary goods and services and so the bidding up of prices ceases.

But the single most variable market in OZ for goods and services is the housing industry itself, so cooling the housing industry is the quickest way to cool the overall economy.