Prestige car companies have applauded the move by Federal Parliament to put the proposed Luxury Car Tax changes before a Senate Committee.

The decision, made in Parliament this week, effectively stalls proposed move to raise the tax to 33 per cent from July 1.

The committee will investigate the proposed changes to the tax and their effect, including:

• Effect on vehicle price, affordability, cost of living and Consumer Price Index
• Effect of the tax and proposed increase on the adoption of vehicle safety features and environmental technologies; and
• expected impact on vehicle demand and likely consequences for government revenues from GST and stamp duty;
• indexing of the LCT threshold (currently $57,123);
• rationale for taxing ‘luxury’ cars at a higher rate than other goods and services;
• effect on Australian motor industry
• overall taxation burden on ownership and operation of motor vehicles including customs duty, GST, LCT stamp duty and excise on fuel
• extent to which the LCT is viewed as a non-tariff barrier by other car exporting countries.

It was suggested that the committee should hold hearings to hear evidence from Australia’s vehicle manufacturers, importers and distributors as well as industry bodies and tourism organisations.

“The opportunity to present what we believe are very compelling arguments against an increase in this non-tariff barrier is welcome,” Mercedes-Benz managing director Horst von Sanden says.

“Several aspects need to be investigated closely and carefully.

“There is the issue of the threshold at which the tax is applied, and the fact that many everyday family vehicles are being taxed, plus our concern for the livelihood of the 2000 Australian workers who directly depend on Mercedes-Benz for their income.

“There is also the separate issue of the damage to the environment by making these low-emission vehicles more expensive.

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“The adverse consequences that the Senate Economics Committee will inquire into — such as the threshold, the rationale for taxing luxury cars and no other luxury goods, the taxation burden on ownership and operation of vehicles (10 per cent import import duty, 10 per cent GST, LCT at a proposed rate of 33 per cent and the excise on fuel) — all of these together represent an inequitable and unfair burden on the working family who desire low emissions, low fuel economy and five-star safety.”

Audi spokesperson Anna Burgdorf says the company is “extremely pleased” with Parliament’s decision.

“The tax as it was makes Australia uncompetitive and really is a tax on innovation and on safety,” she says.

“We hope that the senate inquiry will show the government that the laws on LCT should be altered dramatically, or abolished altogether.”