Vic motorists to get $177m in tax cuts

Victorian motorists will benefit from $177 million in tax cuts on vehicle stamp duty announced by Treasurer John Brumby ahead of next week's state budget.

Mr Brumby, who made the announcement at Toyota's headquarters in Port Melbourne, said it was a major step forward for the Victorian car industry and had economic, environmental and road safety benefits.

He said the reduction of up to 40 per cent in stamp duty for vehicles priced over $35,000 purchased in Victoria would be effective from May 1, 2007.

The tax cut would be worth $177 million over five years.

"These tax cuts will be paid for largely by redirecting fuel subsidies that have been in place since the High Court decision in 1997," Mr Brumby said.

"They are paid to the five major oil companies and all of the evidence suggests these subsidies are not passed on to motorists."

Mr Brumby said the tax cuts on stamp duty would amount to 40 per cent for cars valued between $35,000 and $45,000, and would be 2.5 per cent for cars valued from $45,000 to the luxury vehicle price of $57,000.

The cuts mean that for a car worth $40,000, such as a Ford Territory, the saving would be $600 in stamp duty.

The treasurer said Victoria was home to two thirds of Australia's vehicle manufacturing industry and he was confident the stamp duty reduction would stimulate new car sales.

"This initiative today will not only benefit motorists ... it will stimulate production in the local (car) industry which is our biggest manufacturing industry," Mr Brumby said.

"It will produce significant environmental benefits because new cars have much cleaner emissions than older cars.

"It is also going to have road safety benefits because new cars are much safer than older cars."

Mr Brumby said the government would also honour its election commitment to provide a $50 annual reduction in registration rates for hybrid vehicles.

A hybrid car features a small fuel-efficient petrol engine combined with an electric motor which is powered by batteries that recharge automatically when driven.

Victorian Automobile Chamber of Commerce (VACC) chief executive David Purchase welcomed the government's decision to redirect the money from fuel subsidies and said he did not expect fuel prices to rise as a result.

"We think the treasurer ought to get a gold Logie for this very sound decision," Mr Purchase said.

"The VACC has been asking the government to look at stamp duty for some time and we're absolutely delighted the treasurer has done it on this occasion."

Royal Automobile Club of Victoria (RACV) spokesman Michael Case said the move would help more Victorians to afford to buy a new car with the latest safety equipment.

"It will increase the affordability of new cars and give more people greater access to important safety technology on new cars such as electronic stability control (ESC) and also curtain side airbags."

Source: AAP 2007

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