BMW decries additional Victorian LCT

BMW Australia chief executive Vikram Pawah says the German prestige car-maker will do “everything in our power” to fight the recently introduced Victorian luxury-car stamp duty.

First announced in late May, the new tax sees the Victorian government impose its own stamp duty of seven per cent of the market value for cars priced between $100,000 and $150,000, while those priced above $150,000 will incur a nine per cent tariff.

The tax, which was introduced at the start of this month, will not apply to low-emission vehicles and vehicles used by farmers for primary production.

Mr Pawah said the car-maker would fight the tax and that it expected the government to provide incentives for prospective car buyers in a slowing market that has seen an 8.4 per cent dip in overall new-vehicle sales through the first half of the year.

“We have been speaking against the federal luxury tax that should have been abolished when the local car manufacturing across the country finished in 2017, and we will do everything in our power to deny the new additional taxes for the benefit of customers,” he said.

“Our expectation from the government is to address the declining industry by providing some stimulus for car buyers.”

Mr Pawah described Australia’s luxury-car tax as “redundant” given it was implemented to assist the local automotive manufacturing industry, which folded in 2017.

Asked if the new Victorian duty will affect BMW sales, which have fallen 4.0 per cent year-to-date, Mr Pawah said the tariff will have a negative impact on the industry overall but could lead to greater sales of electrified models in Victoria, which only make up a small proportion of BMW’s overall volume.

“It’s hard to predict the exact extent this new stamp duty will have on luxury-car sales, but what I can say is that there will certainly be repercussions on the sluggish economy and declining car industry that employs thousands of jobs,” he said.

“If I look for the silver lining in this decision, one that might arise from this action is it specifically promotes low-emission vehicles, our BMW plug-in hybrid and electric vehicles receive a reduction in stamp duty.

“This is positive for customers considering the switch to low-emission alternative drivetrains, however, currently this isn’t where the main sales volume sits for any car manufacturer due to lack of legislation and incentives.”

About 50 per cent of Australian BMW vehicles will be affected by the new stamp duty, including all variants in the 6 Series GT, 7 Series, 8 Series, X5, X6 and X7 ranges.

BMW will work with other members of the Federal Chamber of Automotive Industries (FCAI) to fight the new tax, including Mercedes-Benz Australia/Pacific (MBAP), who has already publicly denounced the new levy.

MBAP managing director and chief executive Horst von Sanden told GoAuto at the start of the month that the tax was unfair as it targets the automotive industry particularly.

“The very basic question is: How much more burden do you want to load on the shoulders on the car industry?” he said.

“The luxury-car tax for starters is actually, in my words, an insult because if a government or a country decides to tax luxury, that’s fine, but then tax all luxury goods, not only cars.”

Mr Pawah agreed that a tax exclusively for the automotive sector was unusual and unfair.

“We are an easy target for the government compared to other luxury goods because of the high numbers (the Victorian prestige segment contributed over 31,000 sales in 2018) and higher price point compared to other luxury goods,” he said.

“As far as I know, the automotive industry is the only luxury consumer good and service that attracts a federal and now state luxury tax in Australia.”

At the time of the announcement, Victorian treasurer Tim Pallas said the tax would not have a significant effect on the broader community, with the type of buyer to be affected by the levy also one that should be able to shoulder the extra cost.

“If you can buy a $200,000 Maserati, you’re not going to be particularly fazed by a slight increase in the rate of vehicle duty that you have to pay,” he said.

FCAI chief executive Tony Weber described the stamp duty as “money-grabbing at its worst”.

“But what’s more disturbing is that it is a tax on safety and technology. It targets vehicles that introduce innovative safety and technical features to the market,” he said.

“And the vehicle which attracts the most LCT is a Toyota LandCruiser – a popular vehicle for families and landholders. Hardly a luxury vehicle.”