Motoring groups attack Queensland tax slug
BY JAMES STANFORD | 5th Jun 2007
Tax changes included in today's state budget will increase stamp duty on all new and used non-hybrid cars and trucks on a sliding scale that means vehicles attract more stamp duty the more cylinders they have.
There are no exemptions or discounts for ultra-efficient diesel or LPG models.
Only four petrol-electric hybrid passenger vehicles are sold in Australia – the Toyota Prius, the Honda Civic Hybrid and the high-performance, V6-powered Lexus GS450h and RX400h.
Queensland vehicle stamp duty had been set at two per cent for all models in the past.
Under the new scheme, all hybrid models will remain at 2.0 per cent, while the stamp duty will increase to 3.0 per cent for four-cylinder vehicles, 3.5 per cent for those with six cylinders and 4.0 per cent for those with eight.
That means that under the new scheme, stamp duty on a $38,000 Commodore V6, for example, will increase by $570, while duty on a $44,990 V8 SS model will rise by $900.
The changes are in line with a sustained push for smaller vehicles in the Sunshine State – one of the fastest-growing states for new-vehicle purchases in recent years – which took a dramatic turn late in 2005 when the Beattie government decided to exclude any vehicles over six cylinders from its fleet purchases.
This has caused a dramatic decline in state government purchasing of Australian-made vehicles.
All other Australian states determine a vehicle’s stamp duty tax based on the price rather than its specifications or engine size.
Queensland Premier Peter Beattie highlighted the low tax rate for hybrids when announcing the new tax scheme last week.
“Meaningful efforts to combat global warming must involve incentives for low-emitting vehicles,” Mr Beattie said.
The Queensland government expects to raise more than $200 million a year from the new tax regime, which it will spend on mental health.
Motoring groups, car companies and the Federal Chamber of Automotive Industries (FCAI) have said the stamp duty changes represent pure revenue-raising.
“They have tried to dress it up with an environmental gloss, but it is simply a tax grab,” FCAI chief executive Andrew McKellar told GoAuto.
Mr McKellar said the tax increases would discourage some Queenslanders from buying new cars.
“It is a straight sling on the motoring public at a time when governments should be encouraging access to the latest technology and safety features of new vehicles,” he said.
RACQ general manager of external affairs Gary Fites told GoAuto that the stamp duty changes were poorly thought through.
“It is based arbitrarily on the amount of cylinders a car has, it takes no account of that car’s actual environmental performance,” Mr Fites said.
He pointed to the federal government’s Green Vehicle Guide, which combines fuel consumption, greenhouse emissions and engine compliance ratings, as an example.
“There are four (cylinder petrol) cars which have the same five-star rating as the Prius and a half-star better rating than the Civic Hybrid and yet they will be taxed at a higher rate,” Mr Fites said. “That shows the level of science that went into all of this.”The lowest stamp duty rate of two per cent applies to all hybrid models regardless of the amount of cylinders used by the engine component of the petrol/electric powertrain.
That means the forthcoming Lexus LS600h, which uses a V8 petrol engine and an electric motor to consume an estimated average of around 14L/100km, would be taxed less than the four-cylinder Proton Savvy that uses just 5.7L/100km.
Mr Fites said the public did not need any encouragement to buy more fuel-efficient cars and was already “years ahead” of the government.
“The government comes out with an ostensibly grand planet-saving initiative, but people have already been voting with their wallets and choosing small cars for their economy, which incidentally have lower greenhouse emissions,” Mr Fites said.
He said a better way to reduce the environmental impacts of cars in Queensland would be to take steps to reduce to chronic traffic congestion in the state’s south east.
“These cars stuck in traffic are using twice the amount of petrol and producing twice the amount of greenhouse emissions, but fixing that problem is all just a bit too hard.”The RACQ recognised mental health was a serious issue, but Mr Fites argued it should be paid for by the whole community rather than just motorists.
The tax sting for models with more cylinders represents another challenge for local manufacturers of big Australian cars.
Mr McKellar said the Queensland stamp duty changes would have a worse effect on local manufacturers who predominantly build six- and eight-cylinder models. Only Toyota builds a four-cylinder car, the Camry.
“The way in which they have implemented it penalises Australian producers more than most importers,” Mr McKellar said. “It is inequitable, but really it doesn’t help anyone.”Holden, Mitsubishi and Toyota all refused to comment on the Queensland stamp duty changes, but Ford Australia spokesman Edward Finn said they were disappointing.
“Ford does not support increases of stamp duty because it is a disincentive for motorists to make the upgrade to purchase new more fuel efficient and safer models,” he said.
Mr Finn said Ford Australia also did not agree that vehicle taxes should be linked to the amount of cylinders a vehicle has.
“It obviously has a greater impact on a company such as ours which produces vehicles with larger capacity engines, which is disappointing for a local manufacturer,” he said.
The Queensland vehicle stamp duty increase is out of step with other state governments which are actually cutting the taxes.
Victoria slashed its stamp duty by up to 40 per cent last month, while Western Australia will also change its complicated duty structure to reduce the strain on car buyers from July.
Stamp duty rates are calculated differently from state to state. In Victoria, the new stamp duty system sees motorists pay 2.5 per cent stamp duty on vehicles costing up to $57,000 and five per cent above that figure.
The Queensland new-car industry has grown significantly in the last decade as new car sales follow economic growth in the state. Notwithstanding the boom WA is currently experiencing, for the past two years Queensland has sold around twice the number of new vehicles – more than 210,000 – to be the third-largest state in overall sales terms.
VFACTS sales figures show Queensland sold 212,000 new vehicles last year, compared to Victoria on 242,000 and NSW on 293,000. WA sold 110,000.
While the Beattie government is happy to introduce stamp duty increases, it dare not tamper with the state’s 8.3 cent per litre fuel subsidy that means it generally enjoys the cheapest petrol prices in Australia.
Back in 2000, Mr Beattie announced he would end the Queensland fuel subsidy to put a stop to what he called “rorting” by oil companies. His idea was to replace the petrol subsidy with a reduced vehicle registration fee. Within a week, Mr Beattie admitted he was wrong and the fuel subsidy was left in place.
“The community made it really clear to me,” Mr Beattie told ABC TV back in 2000.
“In one of the shopping centres, I couldn't find anybody who supported our scheme.”The new stamp duty regime that penalises cars with more cylinders comes as little surprise given the Beattie government’s current fleet vehicle policy.
While most governments attempt to support Australian manufacturers by purchasing predominantly locally-made models, Beattie’s government uses a “four-cylinder only” government fleet policy, insisting six cylinders can only be used in special circumstances.
The move has placed most Australian-made cars on the outer, including the Commodore, the Camry (when it was sold with a V6), the Ford Falcon and Toyota’s new Aurion.
As a consequence, the amount of Australian-built vehicles purchased by the Queensland government slumped from 8509 in 2004 to just 3551 last year. At the same time, the Queensland government increased purchases of imported vehicles from 4796 in 2004 to 5011 last year.
The latest stamp duty changes and the penalty for big-sixes are sure to rub salt into old wounds at GM Holden.
The company was encouraged to open a production facility in Acacia Ridge, Brisbane, in the 1960s on the premise that the Queensland government would purchase a large volume of cars. The plant was closed in 1984 and Holden insiders are still angry that the government never lived up to its promise of buying anywhere near as many vehicles as it had indicated.
That left Ford as the only manufacturer in Queensland, before its Eagle Farm facility closed its doors in 1998.
Peter Beattie’s office was not available for comment before GoAuto went to press.