Powered by
- Car Reviews
-
Car News
Latest news
-
Car Comparisons
Latest comparisons
- Chasing Deals
Latest news
Latest comparisons
LCT could be scrapped as Prime Minister Albanese bids to strengthen trade ties with Europe
Australia’s controversial Luxury Car Tax (LCT) could be abolished as part of the newly reelected Albanese government’s attempts to negotiate favourable trade conditions with Europe in the face of volatile US trade tariffs and global economic uncertainty.
A report published in The Australian claims that “a source close to the Prime Minister” has revealed that the Federal Government is “prepared to dump the [LCT] tax” in trade for “better access for Australia’s agricultural exports”.
Essentially it’s being proposed that abolishing LCT is a bargaining chip in the Australian government’s hopes to secure free trade with Europe.
It appears as a response to the EU’s request for global aid to help its increasingly struggling automotive industry negotiate the challenges of US trade tariffs as well as increased competition from Chinese carmakers.
LCT was introduced in 2001 as protectionism for the Australian manufacturing industry, which ceased in 2017. In the years since, it’s been rumoured that the controversial tax would be removed but it remains applied to this day.
The 33 percent tax is currently applied to vehicles with the dutiable value above a $80,567 threshold, or above $91,387 for “fuel efficient” vehicles with a claimed fuel use under 7.0L/100km.
The tax originally targeted luxury European vehicles from the likes of Audi, BMW and Mercedes-Benz as a counter specifically to Holden and Ford Australia models. However, inflationary impact over the years now sees mainstream models such as Toyota Prado and Hyundai Palisade subject to the LCT.
According to widespread estimates that LCT has and continues to contribute $1.2 billion to $1.3 billion to the government coffers annually – it is unclear if and how the deficit will be offset with other taxes passed on to Australian motorists.
The report in The Australian suggests that an unnamed inside source revealed that Europe has asked the federal government to “speed things up” as the EU attempts to counteract US trade tariffs currently coming into force now.
Further, the proposed removal of LCT appears to be one of a number of strategies from the Albanese government to secure favourable trade conditions abroad, including minerals trade with Asia, specifically India.
Latest news
About Chasing cars
Chasing Cars reviews are 100% independent.
Because we are powered by Budget Direct Insurance, we don’t receive advertising or sales revenue from car manufacturers.
We’re truly independent – giving you Australia’s best car reviews.
