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Federal Senator calls for end to safety-killing car taxes

By Cameron Kirby, 13 Apr 2018 News

David Leyonhjelm senator car safety

David Leyonhjelm slams car import tariffs that add $1500 to the price of a Holden Commodore

A FEDERAL senator who has previously hooked into Australia’s speed limits for being too low has now taken the government to task over car import tariffs he says are locking buyers out of owning safer cars.

Liberal Democrats Senator David Leyonhjelm said the import duties forced on some car brands, but not others, were “costing lives on Australian roads”. He called for “an end to the punishing layers of taxation” which he claimed was discouraging people from upgrading their cars to new ones.

Of note, he said,  was what the tariffs were doing to a former Australian-made favourite, the Holden Commodore, which was now soured from Germany, a country that did not have a free trade agreement with Australia.

David Leyonhjelm cartoon“Cars made in any country with which Australia does not have a free trade deal attract a five percent import tariff, so more than $1500 is imposed on entry-level Holden Commodores that are now made in Germany,” Leyonhjelm said.

“Then there’s the luxury car tax, which imposes a 33 percent tax on the value of new cars over $65,000. This adds more than $6000 to the price of a basic LandCruiser, and more than $120,000 to a top-of-the line BMW.

Read next: Entsch says changes to grey import laws are ‘dead'

Leyonhjelm laid the blame with both federal and state governments for the layers of taxes that were applied to new car purchases.

“Now add the GST, then state duties of around three percent on top of that. This is quadruple taxation: a tax on a tax on a tax on a tax,” he said. “It’s a good thing Australians love their cars so much because they are paying through the nose for them.”

David Leyonhjelm motorbike
Australia has one of the oldest car fleets in the developed world. According to the Australian Bureau of Statistics’ 2016 Motor Vehicles Census, the average age of all vehicles registered in Australia is 10.1 years. This remains unchanged since 2015.

The senator’s home state of Tasmania has the oldest fleet with an average age at 12.8 years, while the Northern Territory had the youngest fleet with an average age of 9.2 years.

Leyonhjelm said Australia’s ageing car parc was in part due to taxes discouraging people from buying new vehicles, while new vehicle sales were propped up by “government-imposed quotas on used car imports” – a reference to the government’s failed bid to introduce more relaxed grey import duties.

Read next: Luxury Car Tax tipping point to rise

“The Coalition is intimidated by the manufacturers and their dealerships who sell new cars into Australia, and is now threatening to make used car import arrangements even more restrictive,” he said. “The end result is an average car age of 10 years in Australia, and old cars are less safe and emit more pollution.

David Leyonhjelm driving
“Crippling car taxes are not just making us poorer. They are costing lives on Australian roads.”

Australia is currently in talks with the European Union over a free trade agreement that is expected to remove both car import tariffs and the Luxury Car Tax, the latter of which is argued to be a false tariff under international trade framework.

Free trade agreements are already in place with other countries that export cars to Australia, including China, South Korea, Thailand and the US.

Of the record 288,324 vehicles imported to Australia over the first three months of 2018, more than 220,000 have come from countries that have a FTA with Australia.