MERCEDES-BENZ Australia/Pacific (MBAP) will fight the recently introduced Victorian luxury car tax (LCT) that sees vehicles priced above $100,000 slugged with extra tariffs, arguing that the new levy will do more harm to the economy than good.
At last week’s launch of the AMG GT 4-door Coupe, MBAP managing director and chief executive Horst von Sanden slammed the increased vehicle excise, questioning the need for extra charges on top of stamp duty, registration fees and the national LCT.
“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.
“In a time when the luxury-car tax is more and more under scrutiny and question with the free-trade agreement with Europe, then we all of a sudden see that additional burden of a stamp duty by one state government.
“How many taxes do you load on a car? In the end, you pay 50 per cent taxes on a car and is that reasonable? And if anyone thinks it is reasonable, the question is why?
“We all need taxes, we all need to contribute to the income of a state or a country, but it should be equitable, it should be fair, and I believe it is not.”
For reference, the $349,900 before on-road costs of the Mercedes-AMG GT63 S 4-door Coupe launched last week balloons to $374,410.90 driveaway, according to the German brand’s website, after $18,470.40 stamp duty, $853.50 registration and $3990 delivery charges are applied.
MBAP lists the LCT – which is applied to fuel-efficient vehicles above $75,526 and other vehicles above $67,525 at a rate of 33 per cent of the amount above the threshold – as $66,636 for the top-spec V8-powered AMG GT 4-door Coupe.
As reported, the additional Victorian LCT will be applied at seven per cent for vehicles priced from $100,000 to $150,000, while vehicles over $150,000 will be hit with a nine per cent surcharge.
Mr von Sanden said the increased tariffs will have a negative impact on sales, which will knock on and affect dealers and car-makers, who both employee hundreds of people.
“Will it do more damage to the Australian economy than good? And that is also obviously in conjunction with our dealers who have suffered a fair bit from the difficult market conditions and now they will potentially lose more sales by people no longer being prepared to pay the extra surplus, which is mainly tax,” he said.
“It’s not just Mercedes, we’ll ask these questions ongoing, but I think that is a bigger picture, an industry question, a question for the OEMs, a question for the retailers, a question for the customers because … all the lifesaving technologies we have in the cars today have been developed in luxury cars first.
“If we keep punishing or penalising luxury cars, then there will be less potential to develop ongoing lifesaving or more environmentally friendly technologies, so actually I think it is a false economy.”
A loophole Victorian customers could employ is simply buying vehicles from South Australia or New South Wales, which Mr von Sanden is aware of, but he also revealed the brand could face a sales “drought” in the coming months as customers pulled sales forward to avoid the tax.
Mr von Sanden also revealed that the introduction of the new stamp duty has also thrown a spanner into the works of the abolition of the national LCT, which is currently being explored via the proposed European Free Trade Agreement.
“The Victorian stamp duty regulation is certainly something that concerns us and the industry gravely, we believe it’s unreasonable and unwarranted and we will certainly try everything we can to go against it, mainly through the Federal Chamber of Automotive Industries (FCAI), and also the dealer association are taking some action,” he said.
“That is certainly the last thing we were hoping, we were hoping with the European Free Trade Agreement negotiations that the luxury-car tax might be on its last legs, but now this comes up.
“There were some positive signs coming out, but it has obviously changed a little bit with the latest stamp-duty discussions, but you never know.
“There are some acknowledgements that this is obviously one of the prerequisites to finally get it signed.
“The European Union, as far as I know, was very clear and said without that, it doesn’t make a lot of sense – so without the abolishment of luxury-car tax – but there’s nothing decided.
“It (Victorian stamp duty) is confusing it, of course.”