Call to End Vehicle Tariffs as Australian Production Winds Down

South Australian Treasurer Tom Koutsantonis wants all tariffs on imported vehicles abolished, saying they no longer are needed because there will be no Australian-based car manufacturing industry to protect when GM Holden and Ford end local production.

Koutsantonis says removing tariffs such as the luxury-car tax (LCT) would allow Australian governments and the private sector to procure low-carbon-emitting electric, hybrid and hydrogen vehicles for fleets at a lower cost.

This would help meet carbon-reduction targets to which the Australian government committed at the 2015 climate-change treaty meeting in Paris.

Once local manufacturing ends in 2017, there no longer will be a local industry to protect. The taxes will be raising revenue without providing the benefits they originally were designed to deliver.

“These tariffs were rightly implemented to support jobs in automotive manufacturing, but by next year there will be no industry, and no jobs left to protect,” Koutsantonis says.

It is hard to justify continuing to raise revenue from Australians through these taxes beyond that point, he says.

“We shouldn’t punish Australians who want to import these types of vehicles to limit their impact on the environment,” he says. “Lifting these tariffs will also make these vehicles affordable for Australian families and businesses who want to do their bit to limit their impact on climate change.”

Koutsantonis says the state government fleet in South Australia is made up of more than 7,000 vehicles of various makes and models.

The size of government fleets mean a significant opportunity exists to reduce carbon emissions by procuring electric, hybrid and hydrogen vehicles. These vehicles now are more expensive because of the luxury-car tax.

The Federal Chamber of Automotive Industries says Koutsantonis is preaching to the converted.

FCAI long has opposed the LCT, and CEO Tony Weber says it’s time this issue, along with tariffs, returns to the federal government agenda as both taxes artificially suppress the affordability of new-vehicle technologies.

“The LCT, in particular, acts as a device to artificially inflate the price of vehicles offering the latest in safety and emission technologies,” Weber says in a statement.

“The LCT is imposed at what can only be described as an arbitrary price level and doesn’t even pass the fairness test. Why is this tax imposed on the car industry when a raft of other luxury goods don’t get taxed the same way?”

Weber says he agrees with Koutsantonis’s view that with the cessation of volume local-vehicle manufacturing 12 months from now, an import tax on vehicles no longer would be necessary.

“The Australian new-vehicle market is one of the most competitive in the world,” he says. “Reducing tariffs and taxes provides manufacturers with further opportunity to bring their new technologies to market at even more affordable prices.”