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Comment by John Mellor

THE Victorian Automobile Chamber of Commerce (VACC) is in urgent talks with the Victorian government to exempt existing order transactions from being subject to the surprise imposition of two new super-luxury motor vehicle duty thresholds.

While the chamber is not giving up on removal of the new tax, which has already been passed into law, the priority is to point out the unfairness of having buyers who have already signed up for a car before the tax was announced being hit with a very large additional level of stamp duty.

The VACC is in talks with Victorian treasurer Tim Pallas and is organising a meeting between Mr Pallas and LMCT dealer members this month.

The discussions revolve around getting an exemption on the increased payment of the stamp duty on vehicles after June 30, when the duty kicks in, for those subject to pre-existing orders that were executed before the May 27 budget release.

At the same time the VACC has conducted an urgent survey of its LMCT member dealers in the wake the government’s move in order to paint an accurate picture of the likely effect on sales of the increase in stamp duty on vehicles costing more than $100,000 and an additional levy on vehicles costing more than $150,000.

The survey was conducted to provide the chamber with current data to take to the government.

The move by the Victorian government, which is counting on the fact that few of the ALP’s mainstream supporters will have any sympathy for people who can afford a vehicle worth more than $100,000 or $150,000, may in fact have a negative longer-term impact by pointing to the very high level of taxation levied on motor vehicles by various governments and could fall into the hands of those lobbying Canberra for the removal of the luxury car tax.

In examples developed by the VACC, a Mercedes-Benz G63 S AMG SUV has the following price structure:

List price: $200,000

GST: $20,499

Registration including TAC insurance: $861.80

Federal luxury car tax: $47,747

Victorian stamp duty: $24,606

Total taxes paid: $93,714

A Mercedes-Benz E200 attracts a total of $24,106 in various taxes which boosts its list price to $80,000.

There are those who believe that all states will now follow Victoria (because they can) and that is going to put increasing pressure on Canberra to scrap the LCT.

While it is a long bow to draw, continued impositions of this kind could well accumulate in the public mind over time that it is at the very least unfair and even unethical for politicians to turbocharge tax receipts by levying taxes on taxes – something that businesses would never be allowed to get away with.

How the Victorian government has changed stamp duty levels:

  • From July 1, 2019, motor vehicle duty for used cars valued above the luxury threshold will be charged at $10.40 per $200 of market value.
  • From July 1, 2019, two new super-luxury thresholds will be introduced. One is for cars valued between $100,001 and $150,000 that will be charged duty of $14.00 per $200 of market value. The second is for cars valued above $150,001 that will be charged duty of $18.00 per $200 of market value. These new taxes will be on top of the already existing LCT rate for vehicles above $66,331.
  • All low-emission cars (with CO2 emissions less than 120g/km) and cars owned by primary producers used in the business of primary production and valued above the LCT threshold will pay a concessionary duty rate of $8.40 per $200 of market value.

VACC chief executive Geoff Gwilym told GoAutoNews Premium: “We are disappointed that the car is once again being used as the packhorse for state taxes and we urge the Victorian state government to seriously consider the sustainability of the taxes and to start to think about how they will reduce them again over time as the economy gets into better economic shape.”

Ironically, the VACC had written to Mr Pallas in March in the lead-up to the NSW state election when the NSW ALP, as part of its election campaign, said that it would introduce stamp duty on vehicles over $100,000. The ALP plan prompted Mr Gwilym to request that Mr Pallas issue a strong public statement that it had no plans to introduce such a tax in Victoria.

The letter pointed out the tough trading conditions in vehicle showrooms and requested that Mr Pallas contact his NSW ALP counterpart to point out the disruption that such a surge in stamp duty would cause.

In the event, the NSW ALP did not win government but then Victoria went ahead with its own version of the tax.

Comment by John Mellor

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