Greens to rescue 'Luxury' brands?

The Federal Government's proposed increase of the Luxury Car Tax (LCT) could be sidestepped this week on environmental grounds.

News from Canberra, where the Parliament is now sitting after an eight-week winter recess, is the Government's proposed change to the LCT rate may be defeated, with both the Coalition and the Greens now likely to vote against the increase.

With the new make up of the Senate, the Government does not have a majority in the upper house. To pass the increase, therefore, the Government requires the opposition to vote in favour of the increase, or alternatively the support of key independents and/or The Greens.

The unlikely ally of the luxury brands therefore now appears to be The Greens.

The Coalition was already on record stating it opposed the increase from 25 - 33 per cent. Indeed, when the Rudd Government announced the tax in its May budget (more here), the opposition labelled it the 'Tarago Tax', telling the general media that "it was not aimed at luxury cars, but would increase the price of family transporters for people 'with a few kids' or those using wheelchairs."

More recently, the opposition has suggested the increase should be rejected on pure financial grounds. During Senate hearings into the increase, Deputy Leader of the Opposition in the Senate and Shadow Minister for Innovation, Industry, Science and Research, Eric Abetz, noted that manufacturers believed the actual tax collected could be reduced due to the increase.

Abetz quoted Audi's estimate of a reduced LCT take of $123m (over four years) based on a projected decrease in sales of LCT-taxed vehicles.

"Today [July 31] the Senate Economics Committee heard from Audi that the projected loss in sales by the increased tax will cost $123 million in revenue over four years... And that's just one of 30 or so companies selling cars in Australia!" Abetz stated in a media statement.

However, it was the evidence presented from a number of marques, about the effect of the increased tax on the availability of safety, environmental features and innovation in cars, along with fierce lobbying from the automotive sector that appears to have galvanised the opposition to the tax increase.

Speaking to the ABC's 7.30 Report last night, Greens leader, Senator Bob Brown confirmed the scuttlebutt from Canberra that the environmental party would not support the tax in its current form.

"When it comes to looking at the tax impost on luxury cars, if they're gas guzzlers sure... But, if they're energy efficient... If they're climate friendly, no [we won't support the tax increase] -- it's a retrograde tax.

Said Brown: "We'll be talking to the Government about that to refine and improve that measure..."

The Carsales Network understands a number of key auto industry lobbyists will spend this week in Canberra in the lead up to the vote.

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