FEARS that a proposed state-based luxury car tax would make Queensland prestige-car buyers shop across borders may not play out as car retailers feared because Queensland car purchase taxes are low by Australian standards and the proposed increase would only make the state more competitive with other regions in the country.
Nevertheless, the Labor Party cleary decided to ambush the stakeholders in the state’s car retailing industry by deliberately denying them a chance to put their case against the move.
What shocked observers was that the Queensland tax was announced by the Labor Party with just two days to go before polling and during the advertising blackout before polling day.
This caught the industry on the hop as there was no indication that the tax change was planned and, worse, no time to react to it before election day.
What is even more disturbing is that Queensland is yet another state that is taking upon itself to add state imposts to taxes that are levied by Canberra. This will lead to both state and federal taxes of that same activity.
At this point the proposed tax remains just that, a proposal, although the election result is likely to see Labor retain power.
Under the proposal, the Labor Party plans to lift the stamp duty on motor vehicles priced over $100,000 – inclusive of federal taxes but before on-road costs – by two percentage points, rising to $5 for every $100 of car value from $3 per $100.
Currently, Queensland ranks with the Australian Capital Territory as the two cheapest states and territories in Australia for vehicle stamp duty.
The proposal to raise the stamp duty will lift Queensland to become the second most expensive, after Western Australia. However, because Queensland has a graduated stamp duty rate based on the number of cylinders of the vehicle, buyers of V8-engined vehicles will be hit the most.
For a $100,000 four-cylinder luxury car, including luxury-car tax and dealer delivery, the current stamp duty is $3000 but will rise to $5000 if the proposal is passed by the Queensland government, adding $2000 to the price of the car.
Adding in Queensland registration costs (about $450) the on-road price of the car will be about $105,500 if the proposal is adopted. The price today would be about $103,500.
By comparison, in WA, the on-road price would be about $107,000 and in Victoria it would be $104,700 and NSW it is about $104,500.
The Queensland increase will affect all vehicles priced more than $100,000. It is important to note that this price includes the list price plus luxury car tax, dealer delivery and any accessories, including bull bars and tow hitches, upgraded wheels and cabin options such as premium audio and even upgraded safety equipment.
That indicates it will affect not only luxury cars, but vehicles such as a Toyota Prado Kakadu ($85,611 plus dealer delivery) with barwork accessories. It can also affect most Toyota LandCruiser 200 Series and Nissan Patrol V8 wagons.
The proposal has been supported by Queensland treasurer Curtis Pitt who was quoted in the Australian Financial Review saying: “If you can afford a Maserati, a Porsche, a Lamborghini or a Ferrari you can contribute to this state and the investment of roads in Queensland.”
The Australian Automotive Dealers Association (AADA) said it was strongly opposed to the proposed tax increase.
AADA CEO David Blackhall said the industry was not consulted and called it “a clear case of policy on the run”.
Mr Blackhall said that taking all motoring costs into account, Queensland was “the most expensive state in Australia to own and operate a motor vehicle”.
“This thought bubble will hurt consumers and the industry.
“Earlier this year, Victoria hiked stamp duty on cars without prior industry consultation or warning.
“The new Queensland tax, like the Victorian tax, is nothing more than an impost on retail dealers which will inevitably lead to reductions in the profitability of these businesses, and potentially job losses if those businesses are forced to cut back.”
Mr Blackhall said Queensland was proposing “the only state-based luxury-car tax in Australia”.
“This will not just penalise the car buyer.” he said.
“Queenslanders working in the supply chain for vehicles subject to this this tax, such as sales staff, finance providers and workshop technicians, they all suffer.
“The Treasurer has suggested that this new tax will target those buying Maseratis and Ferraris. Let’s be very clear, at that price point this tax will fall on a top selling vehicle such as the Toyota LandCruiser which is popular with farmers.”
Mr Blackhall said there was already a luxury-car tax which is levied by the federal government “and this duplicate tax may lead to unintended consequences, such as jurisdiction shopping and a move away from safer, more fuel efficient vehicles”.
“I wouldn’t be surprised to see motorists in South East Queensland crossing the border into New South Wales to purchase vehicles and avoid this tax, which would be a terrible result for Queensland new-car dealers,” he said.
“Vehicles in this price range are generally equipped with advanced safety and fuel efficiency features and it makes little sense to apply an additional tax to vehicles providing societal benefits.”
Automotive Holdings Group Ltd (AHG) managing director, John McConnell, described the proposal as “another impost to the customer”.
“I think we (the automotive industry) are a big target and a value proposition in terms of the flow of goods,” he told GoAutoNews Premium.
“So anything applied to automotive has a very rapid and large financial flow-back to government.
“But it isn’t necessarily helpful. Our industry, in light of the many things that are happening with finance and insurance changes which bring with it added complexity to businesses, isn’t that strong at the retail level with flat sales figures.
“Anything that adds an impost to the customer will not be helpful.”
Comment by Neil Dowling and John Mellor