Victorian stamp duty impacts on EU FTA

The CEO of Mercedes-Benz Australia, Horst von Sanden, has taken a swing at the Victorian government for implementing changes to the state's stamp duty regime.

Apart from the profound impact the increased stamp duty is expected to make on new-car sales, the budgetary measure may place at risk negotiations between the Australian government and the European Union for a free trade agreement (FTA) at what seems to be a delicate stage.

Speaking to journalists during this week's local launch of the the new Mercedes-Benz A-Class sedan and the Mercedes-AMG GT 4-Door Coupe, von Sanden was upbeat about the sales outlook for the prestige brand, other than the one sticking point.

"The Victorian stamp duty regulation is certainly something that concerns us and the industry greatly," he said.

"We believe it's unreasonable, it's unwarranted, and we certainly will try everything we can to go against it, mainly also through the Federal Chamber of Automotive Industries. I think also the Dealer Association [AADA] are taking some action."

The higher stamp duty, which will take effect from July 1, will add something like $13,000 to the cost of the Mercedes-AMG GT 63 S 4-Door Coupe (pictured) that von Sanden was presenting to the local press for the first time.

"That [higher stamp duty] is certainly the last thing we were hoping. We were actually hoping that with the European Free Trade Agreement negotiations the luxury car tax might be on its last leg. Now this comes out, but we will deal with it one or the other way."

The luxury car tax LCT has been a thorn in the side of the motor industry for years, particularly those companies selling prestige models priced above the tax threshold, but the LCT has even created hurdles for a mass-market brand like Toyota.

Importers have told carsales in the past that an FTA with Europe would be contingent on the abolition of the LCT, but the tax adds hundreds of millions of dollars each year to federal government coffers. That is possibly why the FTA with Europe has been such a long time coming and the LCT keeps soldiering on.

According to von Sanden, progress is being made, but there's no known timeframe as yet for implementation of an FTA between Europe and Australia.

"There were some positive sounds coming out, but it has obviously changed a little bit under the impression of the latest stamp duty discussion," he told carsales in a Q&A session.

"But you never know, there's a lot of discussion, there were some acknowledgements that this is obviously one of the pre-requisites to finally get it signed.

"The European Union, as far as I know, was very clear. It said without that it doesn't make a lot of sense – without the abolition of the luxury car tax – but there's nothing decided."

Asked whether the stamp duty issue was muddying the waters, von Sanden replied that "It is confusing [the issue]."

And asked also whether the European Union were aware that two states of Australia were now charging more stamp duty for luxury vehicles, von Sanden wryly answered "I'm sure they are by now".