Revenue from the Luxury Car Tax (LCT) will be $500 million down over the next four years. That figure was recorded in Hansard back in February when it was bandied around by the Senate Standing Committee on Economics.
The shortfall is in stark contrast with the government's assertions that the LCT would actually generate $555 million over the next four years. Projections for that added revenue were based on the government raising the tax from 25 to 33 per cent late last year (more here).
It's a vindication of sorts for Mercedes-Benz spokesperson, David McCarthy. McCarthy, Senior Manager Corporate Communications at Benz, has been an active opponent to the tax in general -- and the increase in particular.
"When the increase was announced, we said that the LCT increase would cost the government $130 million a year," he told the Carsales Network.
"Hmmm, $130 million over four years; that's $520 million."
"And [the government] said that our calculation was simply a poor 'back of the envelope calculation'. Some envelope. Obviously our envelope is better than theirs!"
McCarthy is also concerned that the government has not tabled a reduction in customs duty over the same period. If the tax payable on imported luxury cars is so far down the tubes, how can customs duty remain stable? Is the government banking on wannabe luxury-car buyers opting for vehicles below the LCT threshold of $57,180 instead? Does the government expect the cost of imported goods generally to rise as a consequence of the Australian dollar remaining devalued against major currencies?
Nobody seems to have an answer for these questions.
"[Hansard] shows that customs duty will not change over the same period," says McCarthy.
"Well, last time I looked imported cars attract 10 per cent import duty and 10 per cent GST, so how customs duty can remain stable is beyond me. It seems that the Government is indulging in voodoo economics. Voodoo economics is where the Government sticks pins in things it does not like -- like luxury cars!"
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