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Private car tax incentives urged

Taxing times: Private car buyers should get a tax break too, says VACC.

Tax breaks for private buyers of new cars too, proposes VACC

General News logo14 Apr 2009

AN INCOME tax incentive for individual vehicle buyers is the latest automotive industry proposal to reverse a 20 per cent decline in new-vehicle sales in 2009.

Victoria’s peak motor industry body says a tax break similar to the 30 per cent investment allowance available to business vehicle purchasers until June 30 is the most effective way to stimulate automotive sales Australia-wide.

“VACC believes such a tax break for privately owned new cars is the most comprehensive way of stimulating the Australian automotive industry,” said the executive director of the Victorian Automobile Chamber of Commerce (VACC), David Purchase.

“An investment allowance for privately owned vehicles, similar to that of business vehicles, would provide a level playing field for all vehicle owners and encourage more people to buy new cars,” he said.

“Why should private vehicle owners not benefit from using their vehicles? After all, not all private car journeys are purely for pleasure.

 center imageVACC executive director David Purchase.

“In fact, most private car use is ‘business’ related and contributes to the national economy in some shape or form. Commuting to work, going to the shops and even dropping the children off at school are all necessary activities in order to keep the wheels of industry and the community turning,” said Mr Purchase.

Federal industry minister Kim Carr told GoAuto last month the business vehicle tax allowance, which will revert to 10 per cent mid-year, would be more cost-effective in reviving auto sales than financial incentives to recycle old vehicles.

So-called scrappage schemes, which have been highly successful in Europe, have been called for by the Motor Traders Association of NSW (MTA NSW) and the Society of Motor Manufacturers and Traders (SMMT) in the UK.

Their recent popularity follows the spectacularly successful introduction of such a scheme recently in Germany, where owners of cars more than nine years old receive a €2500 ($A4940) subsidy if they trade up to a Euro IV emissions-rated car that is less than 12 months old. As a result, new-car sales in Germany denied a global trend to be up 40 per cent in March.

Australia’s peak industry group, the Federal Chamber of Automotive Industries (FCAI), told GoAuto last month it was investigating the merits of a scrappage scheme locally, but has since backed the capital investment allowance for businesses instead.

Australia’s Big Three car-makers told GoAuo any vehicle recycling incentive should be thoroughly examined before being implemented. Scrappage was one of a range of stimulus measures put forward by Suzuki last month, when the full-line Japanese importer also called for CO2 emissions-based tax breaks for buyers of fuel-efficient vehicles.

Proponents of scrappage incentives say encouraging people to buy safer and ‘cleaner’ new cars will reduce the road toll and lower overall vehicle emissions as well as stimulate new-car sales.

Opponents point to the substantial costs involved and the fact cheaper, imported vehicles tend to benefit more than locally manufactured vehicles, and question the environmental impacts of increased vehicle recycling.

The VACC, however, says taxation inducements for private vehicle buyers are a more effective way to stimulate one of Australia’s most important industries, as well as increase the number of safer and more-environmentally-friendly vehicles on the road.

“New car sales are a vital way of ensuring Australia continues to survive the global economic slowdown. With a turnover of $173 billion across all sectors, the Australian automotive industry is vital to this country’s health,” said Mr Purchase.

“There are some very good deals available for new car buyers right now. But a federal government tax break could prove to be an even greater incentive and prove to be a timely boost to the industry and economy.” Official VFACTS figures show sales of new passenger, SUV and light commercial vehicles shrank by 18.8 per cent year-on-year in the first quarter of 2009. Of that, government sales were down just 3.3 per cent, private sales decreased by 15.1 per cent, business sales shrank 20.4 per cent and rental company sales plummeted a massive 66.7 per cent.

Read more:

Scrappage blow-out costs in Germany

Suzuki calls for green incentives

MTAA proposes scrappage scheme

Dealers continue scrappage push

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