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David Blackhall

AUSTRALIAN car buyers are forking out $1.1 billion a year in import duties and tariffs in what industry bodies are terming an excessive money grab that they aim to overhaul.

The VACC this week stepped up its bid to remove what it regards as an outdated stamp duty system that collects money on dealership service loan cars and then allows a double-dip of the tax when the vehicle is sold to a consumer.

In addition, the VACC hopes to crack down on the booming tariff grab that, together with stamp duty, costs Australians $1.1 billion a year, as calculated by Victorian Liberal senator James Paterson.

He said, in a column in this week’s AFR, that the billion-dollar tax collection through tariffs was designed to protect an Australian car-making industry “that no longer even exists”.

He said that the Holden Commodore attracts a tariff of $1200 because it is made in Germany, while the Holden Equinox (from Mexico) has a $1000 tariff and the Astra (Poland) has its retail price raised by $850.

Vehicles valued at over $63,184 ($75,375 for low-emission vehicles) also get a luxury car tax bill.

The contentious tax, duty and tariff system is also being questioned by the Australian Automotive Dealers Association (AADA) that this week told GoAutoNews Premium that it has argued in its recent federal budget submission for the abolition of the tariff.

“We are generally supportive of the stance taken by senator Paterson,” said AADA CEO David Blackhall.

“We plan to do further work on this with the relevant ministers and treasury when parliament resumes in August.”

The VACC’s CEO Geoff Gwilym is focusing on the inequities of the stamp duty system in Victoria and, specifically, the fact that the state revenue office sees a dealership’s demonstrator vehicle as exempt from stamp duty while a service loan vehicle is not.

“The problem that we have is that in our view most … service loan vehicles are often used as a courtesy vehicle by someone who is getting their car repaired,” he told GoAutoNews Premium.

“That vehicle is designed to attract a person to the brand to buy another vehicle. So, our view is that just because you get your car repaired and happen to be given a new vehicle to drive around in while your car is getting fixed, that is not a courtesy vehicle but one that is being used to demonstrate the vehicle.

“So it shouldn’t attract stamp duty and it should be treated in the same way as a normal demonstrator vehicle.

“We know this is the case because nearly all service loan vehicles are sold within the first year and sold with low mileages and, during their life, have been used to help support the brand and attract consumers to their vehicles.”

Mr Gwilym said the VACC is in discussions with the state revenue office.

“They have extended the period of the voluntary amnesty (applying to stamp duty) through to September, and we’re very happy about that,” he said.

“However, we are questioning aspects of the Duties Act 2000 that relates to motor vehicles and stamp duty. The act was written some time ago and the nature of dealerships and the nature of how vehicles are treated at dealerships is different than it was even five years ago.

“We find that dealerships have many more vehicles that they can use for consumers, and that means giving them use as demonstrator vehicles and the potential to use them as service vehicles while the customer vehicle is being repaired.

“We would consider challenging that position legally. However, we’d much rather have a constructive conversation with the state revenue office to recognise the nature of the structure of the industry today and the fact that service loan vehicles and demonstrator vehicles are used for very similar purposes and, as a consequence, they should both be exempted from stamp duty.”

The AADA’s David Blackhall said the stamp duty issue needs to be urgently sorted out.

“The Victorian duties act offers a stamp duty exemption for vehicles that are solely or primarily used for product demonstration purposes,” he said.

“If the usage record confirms that to be so, then the exemption is automatic. If, on the other hand, the vehicle is loaned to service customers ‘for convenience’ or is driven by a sales executive or dealer owner as a personal car, then it is likely to be more difficult to secure exemption under the Victorian state revenue office’s interpretation of the legislation.

“That is regardless of the fact that the car is, for all practical purposes, for sale at all times. As a dealer myself, I had an absolute policy that customers with cars in for service must be offered a loan car one step up from the one they are driving.

“I can’t tell you the number of times that resulted directly in a sale. The same is true today.”

Mr Blackhall said a precedent had been set when, in 2016, Mercedes-Benz Australia lost a court action over this specific point.

“The Victorian state revenue office is using the Mercedes case as a precedent in an initiative to claw back stamp duty,” he said.

“It is offering an ‘amnesty’ from penalties to dealers willing to come forward with voluntary payments for vehicles that should have been included in previous stamp duty returns, based on the court decision.

“The AADA strongly supports the VACC’s plan to engage with the Victorian state revenue office on this matter. This tax grab comes on top of Treasurer Pallas’ cynical 50 per cent increase in the stamp duty rate on new cars in last year’s state budget.”

Mr Blackhall said that state duties and legacy federal taxes were continuing to force consumers to drive older cars without the latest safety features and pollution controls. He noted a recent ANCAP study that showed these older vehicles have a disproportionately high fatality rate in serious accidents.

Mr Gwilym said the VACC will pursue talks with the Victorian state revenue office.

By Neil Dowling

Manheim
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