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‘Slim pickings’ in federal budget
Motor industry tax pleas ignored, but big spend on roads, income tax breaks welcomed
3 Apr 2019
A MASSIVE spending boost for roads and stimulus moves that might reinvigorate stagnant vehicle sales are seen as positives for the Australian motor industry out of Tuesday night’s 2019-20 federal budget.
However, the industry otherwise came away essentially empty handed, with a minor lift in luxury car tax breaks for farmers and tourism operators and improved apprentice employment incentives among the few changes expected to have a direct affect on distributors and dealers.
An industry plea for an end to the luxury car tax and import tariffs again fell on deaf ears, with the Coalition government choosing to maintain its revenue stream from vehicle sales, even though that sales volume has slumped 7.9 per cent this year.
The Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber described the budget as “‘slim pickings’ for the automotive industry”.
“However, the government’s stimulus policies should encourage greater activity across the economy,” he said.
“The allocation of increased funding for roads and transport infrastructure is encouraging, and we assume that this funding will include a provision for infrastructure and incentivisation for new technologies and alternative fuel low emission vehicles.”
Mr Weber said the extension of the small-to-medium enterprise (SME) write-off was welcome as an added enhancement for small to medium business operators.
“Add this to the fact that, according to the CommSec Affordability Index, new vehicles are currently at their most affordable since the 1970s – so there is a real opportunity for added purchases by SMEs.
“And while the industry is pleased to see some minor relief applied to the luxury car tax (LCT) for primary producers and tourism operators, the LCT is an outdated, irrelevant and redundant tax which needs to be abolished once and for all.”
The Australian Automobile Dealers Association (AADA) described the budget as a missed opportunity, with the government failing to remove legacy taxes for an industry that is doing it tough.
AADA CEO David Blackhall said new car sales have slowed significantly in recent months, hurting car dealer businesses and their 70,000 employees.
“For years, we have been told that the abolition of the import tariff and the luxury car tax would need to wait for a return to surplus, but the announcement that we are back in the black has not been accompanied by automotive tax relief,” he said.
“It has been over 18 months since passenger car manufacturing ended in Australia, yet motorists continue to pay taxes designed to prop up a non-existent industry.”
Mr Blackall said the AADA applauded the government for providing relief to farmers and tourism operators by increasing the luxury car tax refund for those eligible, by up to $10,000.
“However, we are very disappointed that this will only apply to vehicles purchased after 1 July 2019’, he said.
“We urge the Government to apply this increased refund immediately otherwise eligible businesses will delay their purchases for the next three months, hurting the car retail industry which is already down eight per cent this year.”
The LCT breaks for farmers and tourism operators is an extension of an existing scheme, taking the $3000 allowance per vehicle to $10,000 on purchases of non-luxury four-wheel-drive and all-wheel-drive vehicles priced over the $66,331 LCT threshold.
The budget papers suggest this is going to cost $2 million in the next financial year and then $3 million a year for the subsequent three years, for a total of $11 million.
This is miniscule compared with the government’s boost for road infrastructure, with nthe Urban Congestion Fund rising from $1 billion to $4 billion, including $500 million to a commuter car park fund to encourage drivers to switch to public transport.
As well, roads of strategic importance fund – aimed at freight transport corridors – gets an extra $1 billion, while an additional $2.2 billion will go to improving roads and bridges to enhance safety.
Dealers will welcome a move to encourage more apprentices, with the incentive for employers to take on apprentices doubling from $4000 to $8000. As well, apprentices who complete their training get a $2000 reward.
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