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BMW boss blasts tax ‘scandal’

Taxing issue: The BMW 7 Series is one of the cars impacted by the "iniquitous" luxury car tax, says BMW.

Aussie motorists ripped off by government tax grab, says BMW’s Phil Horton

BMW logo30 May 2012

LUXURY car importer BMW Australia has described the government take from taxes on Australian motorists as scandalous.

Managing director Phil Horton said Australian drivers received “very little return” on massive revenues taken from car owners.

He called the 33 per cent luxury car tax “iniquitous”, saying it was not really a luxury car tax, just a tax.

“There seems to be no real substance or credibility behind it,” he said. “I was in Canberra with the FCAI (Federal Chamber of Automotive Industries) a couple of weeks ago, and we were quizzing a couple of ministers on the luxury car tax,” he said.

“They just didn’t have any justification for it, really, particularly as various reviews have said to do away with it or maybe even replace it with something that is maybe more focused on fuel efficiency so as has been done in many other countries.

“You start to steer consumer behaviour towards lower emissions and more fuel efficiency, and maybe that will happen over time.

“But quite frankly, I think the government in Australia and the way that they tax the Australian motorist with – in my perception very little return on the massive revenues that they get, in terms of things like improving road infrastructure etcetera – is … can I say scandalous?”

 center imageLeft: BMW Group Australia managing director Phil Horton.

Mr Horton, who described the luxury car tax as his “hobby horse”, said the $57,466 luxury car tax threshold was “a relatively low level”, not just for BMW but for Toyota and other volume manufacturers.

The Henry Report into Australia’s tax structure recommended the removal of the tax – advice not taken up by the federal government when it implemented other tax reforms last year.

Mr Horton’s comments were made in Melbourne at the media launch for two BMW models that, ironically, do not attract a LCT impost.

The $56,400 price of the entry level 3 Series sedan, the BMW 318d, is below the LCT threshold, while the $57,600 320i only just breaches the limit, and would not be affected anyway as its fuel efficiency – rated at 6.0 litres per 100km – qualifies for special dispensation for cars under 7.0L/100km.

Increasingly, luxury car-makers such as BMW, Mercedes-Benz, Audi and Lexus are qualifying for this LCT tax break due to the progressive introduction of diesel and hybrid powertrains, even in large cars.

BMW has three new hybrid cars in the pipeline for launch in the second half of this year, and all them should qualify for the tax break.

For less fuel efficient cars such as the V8-powered petrol 7 Series models, buyers pay the usual 10 per cent GST up to $57,466, and then 33 per cent LCT on the portion of the price above that.

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