The Luxury Car Tax Should Vanish With Our Automotive Industry

I took delivery of a Mustang GT press car this week, and the first thing I did was reverse park it. When it comes to reviewing cars, or meeting people for that matter, I’m of the opinion that early impressions play a huge role in shaping one’s ultimate approval of something or someone. In the case of the Mustang, I popped it into reverse and manoeuvred it into the parking spot and then went to engage the handbrake, which happens to be on the passenger side of the central console. With the sports orientated driver’s seat hugging me and positioned as close to the floor as possible, I awkwardly rotated my shoulder and arm to reach to the other side of the console and lift it. And then out loud said to myself, “well, I hate that.”

It took my American photographer Shelby, whose father once owned a 66′ Shelby GT350, and has never come clean about the inspiration for his son’s name, to jump in and observe that the handbrake was, in fact, positioned for US delivered Mustangs and obviously wasn’t altered for RHD exports.

Even though I still hate it, at least I understand the reasoning behind it.

Recently I took a trip to Holden’s Proving Ground in Victoria and sampled a handful of their new models, including a LHD Acadia, a brand new model for Australia, which is as close to an American truck as we’ve ever sold in this country. It will be imported to our shores in 2018.

With Australia’s most iconic motorsport event running this weekend, and with it the uniquely Australian rivalry of Ford Vs. Holden, I thought it was a perfect time to remind the government that automotive manufacturing in this country, as of this month, is dead.

Come October 20, following 60 plus years of vehicle manufacturing; Holden will shut the doors of its Adelaide facility, and with it, the industry here in Australia, for good. Just last week on October 3, after 22 years of production, Toyota closed its Altona factory, responsible for more than 2 million cars, leaving 2500 employees looking for work. On this very day in 2016, Ford rolled its last Australian made car off the production line making it the first of our big three vehicle exporters to turn off the lights and leave 600 people without jobs.

What I’m very keen to know is what will become of the Luxury Car Tax? A tax that was partially introduced to dissuade Australian’s from buying imported vehicles over the locally built Falcon, Commodore, and Camry. With no local manufacturing industry left to protect and no sensible reasoning around what classifies ‘Luxury’ except a car’s price tag (even if it’s a farmer’s Toyota Landcruiser), why are Australian’s forced to pay exorbitant prices to own, then cop a state-based stamp duty, rego, and insurance to get on the road!

The answer is government revenue, estimated at roughly $650 million a year. The Federal government gets more revenue from the Luxury Car Tax than the brands do manufacturing, importing, wholesaling and retailing, and will receive over $2 billion from LCT before the end of 2020 so that they can allocate it to fucking up the National Broadband rollout.

The cost of living in this country, specifically Sydney, has become absurd and it starts with the grifting by the tax man. I’ve got thirty-year-old mates residing in Asia, who are paying $5k plus a month rent saving unbelievable amounts a year. Choosing to commute to Sydney twice a month and foot the bill themselves, so they don’t have to relocate here and pay Australian tax. “I’ll come back when I’ve got a million in the bank.”

Meanwhile, in Sydney we’re leveraged to our eyeballs on houses we can’t afford, hanging onto a historically low-interest rate of 1.5 percent that hasn’t moved for a year. No one without wealthy parents can purchase houses because their parents bought them all, or worse, they’re outbid by foreign competition, and the rest can’t save for a deposit because rents are too high. Electricity prices are among the highest in the world, as are the prices for global clothing brands. Finally, dining out is extortionate because wages and rent cost the small businesses so much, not to mention the debilitating 27.5% tax rate they’re slugged with as a ‘small business earning under $10 million a year’.

You’d think with the perfect storm of a crisis that is brewing, the government might let Australian’s enjoy what’s left of their money with a luxurious, safe and fuel-efficient car, or at the very least, let people in love get married.

Last month a mate told me his boss was looking to buy an Audi RS6, so I ran some quick numbers on a three-year lease on the $250,000 beast. Just shy of $5000 a month over three years with a $112,000 balloon. Don’t forget your $11,550 stamp duty payment too.

So before tax, you’ve got to be taking home almost $10k a month to drive it. That’s on top of your second car payment, your mortgage, credit card debt, school fees, feeding and clothing your family and the inevitability of some sort of housing bubble correction where you may lose a substantial amount of equity in your home. It’s fascinating stuff.

Surely something has got to give at some point, but as you know I’m not an economist, I’m just a bloke with an opinion, and a means to share it. One who’d like to see hardworking Australian’s cop a break on rewarding themselves with a nice car.

They’ll need it when interest rates rise 1%.


James is the Founder and Editor of The Versatile Gent.

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