The killing cosy of car taxes

13 April 2018

Liberal Democrats Senator David Leyonhjelm has called for an end to the punishing layers of taxation discouraging new car purchases, leaving Australia with one of the oldest car fleets in the developed world.

Senator Leyonhjelm said state and federal governments seemed intent on making life for motorists more difficult, particularly those in the market for a new car.

“Cars made in any country with which Australia does not have a free trade deal attract a 5 per cent import tariff, so more than $1,500 is imposed on entry-level Holden Commodores that are now made in Germany,” Senator Leyonhjelm said.

“Then there’s the luxury car tax, which imposes a 33 per cent tax on the value of new cars over $65,000. This adds more than $6,000 to the price of a basic Landcruiser, and more than $120,000 to a top-of-the line BMW.

“Now add the GST, then state duties of around 3 per cent on top of that. This is quadruple taxation: a tax on a tax on a tax on a tax. It’s a good thing Australians love their cars so much because they are paying through the nose for them.”

Senator Leyonhjelm said the price of new cars in Australia has also been propped up by government-imposed quotas on used car imports.

Removal of this quota, as New Zealand has done, has been recommended by a succession of reviews including the Government’s own Competition Policy Review.

“However, the Coalition is intimidated by the manufacturers and their dealerships who sell new cars into Australia, and is now threatening to make used car import arrangements even more restrictive,” he said.

“The end result is an average car age of 10 years in Australia, and old cars are less safe and emit more pollution.

“Crippling car taxes are not just making us poorer. They are costing lives on Australian roads.”

/media release