David Blackhall

A RETENTION of outdated taxes and the flow-on impact of slowing the adoption of safety improvements for consumers have been highlighted by Australia’s key car dealer body in answer to this week’s federal government budget.

The Australian Automotive Dealer Association (AADA) said the federal budget has retained inefficient new-car taxes and missed the opportunity to reward consumers and local businesses with lower-priced new vehicles.

“The first budget since the cessation of local passenger vehicle manufacturing provided the government with an opportunity to modernise the taxation regime for new cars,” said AADA CEO David Blackhall.

“Unfortunately, both the passenger-vehicle tariff and the luxury-car tax remain on the books and will collectively generate almost $1.3 billion in 2018-19, significantly more than previously forecast.”

Mr Blackhall said that the sale of new cars brings significant social benefits “as they are safer, more environmentally friendly and more fuel efficient”.

“Improving road safety, reducing vehicle emissions and bringing down energy costs are all government priorities and these taxes hinder progress towards these goals,” he said.

“Increased taxes on the sale of new cars by various levels of government simply force consumers to pay more and in the process hurt many of the people working in the automotive industry, such as sales staff, finance providers and workshop technicians,” he said.

On tax cuts, Mr Blackhall said the AADA supported the government’s ongoing commitment to extend company tax cuts to firms with turnover of more than $50 million due to the very low profit margins dealers make compared with their turnover which includes the price of the cars they sell.

“Due to the high value of their stock, new-car franchised dealers often have high turnover, but much lower profit margins. A corporate tax cut would benefit local car dealers and the tens of thousands of people they employ.”

The federal budget comes a week after the Victorian state budget that also drew the ire of the Victorian Automobile Chamber of Commerce (VACC) for its lack of a focus on labour skills.

The VACC said the state budget “missed an opportunity to focus on quality skills training, provide better support for automotive apprentices and review payroll tax threshold”.

The Victorian budget was delivered on April 30 by state treasurer, Tim Pallas.

While the VACC welcomed positive announcements for infrastructure, schools, health and communities, it said increased TAFE infrastructure funds may be misdirected and that the government should make it clearer that funds should be allocated for the delivery of quality training and this focus should take precedence over creating more facilities.

The treasurer also announced a 50 per cent reduction in vehicle registration fees for apprentices but the VACC said that “early indications are that the discount will only be available for building trades apprentices”.

“The VACC urges the government to ensure the incentive is also available to other trades,” it said in a statement.

“Automotive apprentices use their vehicle to find jobs, travel to work and transport tools. If the government is serious about enabling young tradespeople greater mobility, it should widen the net to all trades.”

It also said that it was “not surprised, but disappointed nevertheless” that the payroll tax threshold was not changed.

“Payroll tax is effectively a tax on jobs and the government budget projects a 6.2 per cent increase in payroll tax collections,” the chamber said.

“All businesses are paying more tax when reductions would have been preferable and more beneficial.

“In addition, Victoria’s payroll tax threshold is out of step with today’s business environment.

“It still lags behind other states, for example, Victoria’s $550,000 threshold has not changed since 2003 whereas, it has been increased in New South Wales to $750,000 and in Queensland it is $1.1 million.

“The Victorian government should have taken the budget as an opportunity to reduce payroll tax and enable businesses to grow and employ more staff.”

By Neil Dowling