7th March, 2016 · Regulation

Want more afFordable cars? easy, tax
them less

2 minutes to read

One of the reasons behind the Federal Government’s decision to allow the parallel importation of near-new vehicles is the belief that cars in Australia are too expensive. Retail automotive industry leaders argue that the Government could help lower prices by reducing the amount it takes in tax on every vehicle sold.
We’ve previously covered what AADA believes is an unfair Luxury Car Tax, but as former AADA Chairman, Ian Field, points out, even for the average vehicle the Government makes more money than manufacturers – and far more than Dealers.

For example, Toyota Australia last year made $544 million profit from $10.2 billion turnover.

“Do the sums; you’ll find that’s about 5.3%. That’s the most profitable car operation in the country and the biggest, the market leader in Australia,” Mr Field said.

“They made 5.3%. The Government took 10 percent in GST! So the Government took nearly double what they made, just in GST. Then there are registration fees and stamp duties to State Governments, and Luxury Car Tax (which raises about $500 million annually). When you add up all the taxes that Governments take, it’s about 15 percent. Fifteen percent they make, and Toyota made 5.3 percent.

“It’s all very well to say, as the Government seems to be, that cars are too dear. Well they’re too bloody dear because the Government takes 15 percent tax.”

From March of this year the Government will make public the tax returns of private companies with turnover in excess of $200 million.

“That has implications for our industry because there are a lot of our members who would fall into that $200 million-plus category. It might be very interesting to the public to see how little car Dealers make in the overall scheme of things,” Mr Field said.

“The Government makes a hell of a lot more money out of cars than we do. It’s all very well to say car Dealers are making too much money, but when Toyota makes 5.3 percent and the Government makes 15 percent, it’s easily fixed. Just charge less tax.”

FCAI chief executive, Tony Weber, agrees.

“If the Government is so concerned about car affordability, it should look at the taxes and other government charges that make up around 20 percent of the price of new cars in Australia,” he said.

“Fixing those tax arrangements, including the poorly-designed and ‘absurd’ Luxury Car Tax, is a better and more targeted way of addressing car affordability than a change that will only ultimately hurt consumers.”

When you consider the total revenue the motor industry in its entirety delivers to governments in Australia, it is a significant amount of income. GST, stamp duties on purchases, registration fees, company taxes, payroll taxes – Australian Governments do very well out of the auto industry – better than any Dealer or manufacturer.