Get rid of luxury car tax: Toyota

TOYOTA Australia has weighed into the luxury-car tax (LCT) debate, saying the federal government should follow the advice of the Henry tax review and get rid of it.

The market leader – which is pulling out of Australian manufacturing in 2018 – described the impost on vehicles above $61,884 as discriminatory and inefficient.

Toyota’s criticism came despite a CPI-related easing of the tax threshold on July 1 when the trigger point for the 33 per cent extra tax on luxury vehicles was lifted by $1568, from $60,316 to $61,884.

For Toyota, this means price reductions of up to $470 on the recommended retail price of 19 of its models, along with a number of models from its luxury Lexus line-up.

Toyota's executive director sales and marketing Tony Cramb said the reduction provided some relief for new-car owners, but he urged the government to get rid of the LCT altogether.

"Australian motorists are already heavily taxed with GST, stamp duty and registration fees when buying a new car, as well as road tolls and a hefty tax on fuel," he said.

"New-vehicle buyers should not be singled out to pay the additional burden of a so-called luxury tax – especially one that is so inefficient and poorly designed.

"The punitive tax rate was originally 25 per cent on the value of the vehicle above the threshold, but was increased to 33 per cent in 2008.

"Application of the tax does not recognise that many vehicles in this category offer important safety, environmental and theft-reduction benefits. The tax also results in significant compliance costs that are borne by our dealers.

"Toyota's opposition to this tax and our call for its repeal is consistent with the recommendations of the Henry tax review.”

The Henry tax review, penned by a panel headed by former treasury secretary Dr Ken Henry, was commissioned by the previous Labor government in 2008 and delivered in 2010.

It recommended sweeping changes to the tax system, most of which have been ignored by successive governments.

Of the 19 Toyota models to cop LCT relief, all but one – the Tarago Ultima V6 automatic – are SUVs across the Kluger, Prado and LandCruiser ranges.

Luxury sportscar-maker Porsche has also announced price cuts of about $500 across most of its range due to the tax change.

The LCT threshold for fuel efficient cars with a combined average fuel consumption of less than 7.0 litres per 100km remains at $75,375.

This means that the prices of many luxury diesel and hybrid models will remain unchanged.