Scoop: Government's LCT cash grab stalled

The federal government has knocked on the head a proposal from Treasury to lower the threshold of the Luxury Car Tax by over $5000.

Information received by motoring.com.au indicates Treasury officials floated a plan to reduce the current LCT threshold from $57,466 to $52,241.82. That would have cast a much wider net, trapping vehicles such as Holden's 3.6-litre Calais V Series, which would have risen in price by around $1500 — all of that going to the government's coffers. Multiply the additional impost for each individual retail transaction by the number of cars affected across the country and the extra revenue would have provided a major boost to the government's revenue. Also proposed by Treasury was the ceiling for the fuel efficient car dispensation be lowered from the current figure of $75,375 to just $68,522.

Under condition of anonymity a source revealed to motoring.com.au earlier today that the idea was launched in a discussion paper, but the Prime Minister's office has since officially stated it's not a 'live issue'. Furthermore, the insider explained, the Treasury proposal wasn't "a close-run thing, but it had legs".

The information came to light just days after the Australian Taxation Office (ATO) officially raised the threshold for the LCT to $59,133. Due to take effect from July 1, the new revised threshold will provide some minor relief for buyers of cars priced between the old and the new threshold. As an example, the newly updated Audi A4 Avant 1.8 TFSI multitronic, priced at $58,500, will no longer be subject to the LCT.

According to the ATO's LCT determination, dated June 27, the ceiling for the fuel efficient car dispensation (for vehicles using less than seven litres of fuel per 100km) will remain where it is currently, at $75,375.

Late today, Toyota issued a press release calling for the abolition of the Luxury Car Tax altogether. The company will pass on the $500 price reduction for the 20 vehicles affected by the increased LCT threshold.

"Despite the small increase to the threshold, the luxury car tax is still an inefficient, punitive and poorly designed measure," said Toyota Australia's executive director of sales and marketing, Matthew Callachor. "It is discriminatory because it applies only to vehicles and the arbitrary threshold is not set at a level that most people would consider a luxury car.

"Not only that, it is a tax on a tax. Motorists already have to pay GST, stamp duty and registration fees when buying a new car, as well as a hefty tax on petrol. Even with the latest threshold adjustment, this unfair tax has not been consistent with inflation since it was introduced in 2000."

Picture courtesy of Angelo Tsirekas/Wikimedia Commons

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