Glen Sealey

A POSSIBLE future free-trade agreement with the European Union would make safer cars more affordable because the duty is a “tax on technology”, according to Maserati’s Australian distributor, European Automotive Imports (EAI).

Maserati Australia and EAI chief operating officer Glen Sealey said said the five per cent tariff applied to vehicles from countries that did not have a free-trade agreement with Australia should be abolished.

“It is an inefficient tax, it is not a justifiable tax and it shouldn’t be there because it is a tax on technology,” he told GoAutoNews Premium at the launch of Maserati’s new entry-level Levante SUV.

“I have been with the EU trade delegation regarding the proposed EU free-trade agreement (FTA), and our view from Ateco (EAI’s parent company Ateco Automotive) is that it should be abolished.

“But that is not negotiated by us – it’s negotiated by our government on our behalf.”

David McCarthy

Australia and the EU started negotiations for an FTA on June 18, 2018. The EU is Australia’s second biggest trading partner, the third biggest export destination and the second biggest services market. In 2017, it was also Australia’s largest source of foreign investment.

Vehicle sales this year show 169,435 vehicles were imported from the 28-member country EU. This represents 17.5 per cent of all vehicles imported to the end of October this year.

The value of the tariffs of the EU vehicles is about $350 million a year, according to trade data from the Australian Bureau of Statistics and the department of foreign affairs and trade.

Mr Sealey said the outcome of negotiations to create an FTA could be some time off.

“It could change if we have a new government that could have a new take on the advantages of an FTA,” he said.

“In the short period I see no change, but I am hopeful that the tariff will be removed.”

Mercedes-Benz Australia/Pacific head of external affairs and corporate communications David McCarthy said it was inevitable that the EU would become an FTA zone and that tariffs on new cars from that bloc would be removed.

“It won’t happen overnight, but I would say it should be in place by 2021,” he told GoAutoNews Premium.

“It’s a relatively easy process. The EU is the last major car-manufacturing area from which we import vehicles. So it’s natural that it should join the other countries in the FTA program.

“We see it as benefiting consumers by bringing high-tech and high-safety vehicles into the country at more affordable prices.”

Maserati Levante

But Mr McCarthy said that while the FTA agreement may be struck with the EU, the removal of the luxury car tax (LCT) may take longer.

“Removing the LCT has to be staggered, maybe over a three-year period with the 33 per cent tax falling to 22 per cent and then 11 per cent,” he said.

“Otherwise it will be very disruptive to the market and especially the used-car market.

“The federal government isn’t saying a lot about its removal, so it’s hard to know when it will be taken away.”

The removal of the five per cent tariff will reduce the price of a vehicle with a $125,000 retail price by about $6250, making it $118,750.

The federal government would not only miss out on an income of $6250 from the removal of the tariff, but the new retail price would reduce the luxury car tax from $13,539 to $12,097 – a revenue reduction for the government on one vehicle of $7692.

By Neil Dowling