- According to reports, Prime Minister Anthony Albanese is prepared to scrap the Luxury Car Tax in Australia, as part of a wider trade deal with the EU.
- The Luxury Car Tax was introduced in 2001 to protect the Australian vehicle manufacturing industry, however, it has remained in place despite the industry effectively shutting down in 2017.
- Albanese aims to improve the strength of Australian exports to Europe with the removal of the tax, which generates $1.2 billion in annual revenue today.
The return of Anthony Albanese to the Lodge could be a very good thing for Aussie car lovers, with The Australian reporting that the newly elected Prime Minister is considering scrapping the Luxury Car Tax (LCT).
The LCT was first introduced in 2001 as part of an effort to protect the Australian vehicle manufacturing industry; however, since Holden and Toyota closed their factories in 2017, following the shuttering of Ford’s local operations, the LCT has controversially remained in place (car owners have attempted to avoid similar taxes overseas).
As the LCT is currently written, vehicles with a value over $80,567 (or $91,387 for low-emission cars) are subject to a tax of 33 cents for every $1 over the threshold figures, translating to an approximate annual tax revenue of $1.2 billion. While this obviously applies to supercars and premium cars, it’s also increasingly applied to the popular likes of the Toyota Prado and the Nissan Patrol as prices have steadily climbed in recent years.
The reason for the LCT’s possible axing is to improve trade between Australia and European nations, in response to the ongoing uncertainty caused by the Trump administration’s tariff policies. Senior Australian officials currently indicate it could take months for Australia to negotiate a better deal with the United States, while the likes of India and the EU are moving to negotiate new Free Trade Agreements to soften the impacts of the tariff policies.
According to The Australian, “A source close to the Prime Minister said the government was prepared to dump the tax in Âreturn for better access for Australia’s agricultural exports to [Europe’s] 450 million consumers.”
It’s understood that EU officials had previously believed the Australian government would scrap the LCT regardless of negotiations, but the Albanese office has confirmed it will remain until an improved agriculture deal is struck. It’s a particularly motivating factor for the Europeans as they face a flood of affordable Chinese-made EVs sold around the world, with LCTs such as Australia’s providing further barriers to the sale of premium European-made cars.
While it remains to be confirmed by the government if the scrapping of the LCT will go ahead, its axing would reduce the prices of many cars by a good margin. A promising sign for Aussie car lovers, but don’t count your AMG’s before they roar.
