Luxury Car Tax (LCT) Increase - How Do You Feel?

[jamesatfish]

Another disappointed car buyer here - as many others have said the threshold is far too low, and justifying a tax by saying 'well those who can buy those cars can afford the extra tax' is just an insult to those who work as hard as they do in order to afford such luxuries in the first place.

As others have noted, car manufacturers put a lot of effort into determining the specification and price points for various versions of their cars. Consider the Holden Commodore - for instance the Calais V-Series. Holden have obviously taken their time to consider there is a $5000 price gap between the V6 and V8 models, the latter of which sits above the LCT threshold. If the V8 goes up $500 due to the government increasing the tax, and Holden's market research has said the V8 should command a $5000 premium, then the natural thing to do is increase the price of the V6 to keep the price gap the same.

So the 'battlers' who buy cars below the LCT threshold will end up being taxed by a similar amount - just with the revenue going to the car manufacturers, not the government.

Of course, unless I missed the changes to the fine print about what defines a 'luxury car', you can still go out and spend close to $100,000 on a HSV or FPV Ute (which, despite having leather, premium sound, massive V8 etc, is still a commercial vehicle) - not to mention the extra FBT benefits involved.

[gareth_oau]

An interesting story about taxes.

This is a little off topic, but its a great story about paying taxes and "tax custs for the rich!!)

You've heard the cry: "It's just a tax cut for the rich!", and it is accepted as fact. But what does that really mean? The following may help.

Suppose that every day, 10 men go out for dinner. The bill for all 10 comes to $100. They decided to pay their bill the way we pay our taxes, and it went like this:

* The first four men (the poorest) paid nothing.
* The fifth paid $1.
* The sixth $3.
* The seventh $7.
* The eighth $12.
* The ninth $18.
* The tenth man (the richest) paid $59.

All 10 were quite happy with the arrangement, until one day, the owner said: "Since you are all such good customers, I'm going to reduce the cost of
your daily meal by $20." So now dinner for the 10 only cost $80.

The group still wanted to pay their bill the way we pay our taxes.

The first four men were unaffected. They would still eat for free. But how
should the other six, the paying customers, divvy up the $20 windfall so that everyone would get his "fair share"?

They realised that $20 divided by six is $3.33. But if they subtracted that
from everybody's share, then the fifth and sixth men would each end up being paid to eat. The restaurateur suggested reducing each man's bill by roughly the same percentage, thus:

* The fifth man, like the first four, now paid nothing (100% saving).
* The sixth paid $2 instead of $3 (3% saving).
* The seventh paid $5 instead of $7 (28% saving).
* The eighth paid $9 instead of $12 (25% saving).
* The ninth paid $14 instead of £18 (22% saving).
* The tenth paid $49 instead of $59 (16% saving).

Each of the six was better off, and the first four continued to eat for free, but outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man "but he got $10!"

"That's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more than me!"

"That's true!" shouted the seventh man. "Why should he get $10 back when I
got only $2? The wealthy get all the breaks!

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for dinner. The nine sat down
and ate without him, but when they came to pay the bill, they discovered
that they didn't have enough money between all of them for even half of it.

That, boys and girls, journalists and college professors, is how our tax
system works. The people who pay the highest taxes get the most benefit
from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good
restaurants in Monaco and the Caribbean.

[VW Convert]

If this Government had the "green credentials" it claims to have, LCT would be replaced by a tax based on the efficiency of the car rather the price of the vehicle. Less fuel consumption = less pollution = less tax.

Sorry if I sound cynical!

Cheers

George

[gareth_oau]

If this Government had the "green credentials" it claims to have, LCT would be replaced by a tax based on the efficiency of the car rather the price of the vehicle. Less fuel consumption = less pollution = less tax.

Sorry if I sound cynical!

Cheers

George

they are looking at this one as well, however, i think that the tax should be on the petrol, not on the car. If I own a big expensive V8, but never drive it, where as if you own a misely 4 cylinder, but rack up long distances, then a tax on the car itself isnt green. IMO to be effective the tax should be on the petrol

[VW Convert]

they are looking at this one as well, however, i think that the tax should be on the petrol, not on the car. If I own a big expensive V8, but never drive it, where as if you own a misely 4 cylinder, but rack up long distances, then a tax on the car itself isnt green. IMO to be effective the tax should be on the petrol

Fair comment Gareth, hard to please everyone isn't it?

Cheers

George

[Steve]

they are looking at this one as well, however, i think that the tax should be on the petrol, not on the car. If I own a big expensive V8, but never drive it, where as if you own a misely 4 cylinder, but rack up long distances, then a tax on the car itself isnt green. IMO to be effective the tax should be on the petrol

There's already an extraordinary amount of taxes and excises and taxes on excises on petrol, though.

I don't mind the slight increase in "luxury" car tax but $57000 is far too low for it to kick in.

[STV4SYT]

$100k i reckon is a fair starting point for it.

Although maybe, for those that have "collections" the limit lowers and the tax increases for each subsequent car. And definitely increase it for luxury (no-essential) items, as someone suggested, leisure craft, helicopter, private jets. But alas all the people that actually own all these also have the money to have accountants that will manage to minimise the tax they pay anyway.


I saw this happen a few years back when the UK government increased the cost of road taxes for trucks, a large percentage of the hauliers rented an office in southern ireland and re registered all their trucks there. guess what happened next?

[richdave]

Tax changes arent that simple.

have you ever rented a house?

yes a few and have owned an investmaent place too.

With no negative gearing in place, why would people buy rental properties?thered be a lot less rental properties available, and those available would cost a whole lot more to rent.

that's why you would stage things so say over a 10 year period the deductibility reduces (Yr 1 100% of expenses, Yr 2 90% etc..) so the market and anyone with investment property can adjuast their financial situation.

Oh and people buy investment prioperty to GET RICH not for any socially minded "give the poor a house" kinda reason. They would still get the CAPITAL GAIN from owning the prioperty too so they are not lucking out.... just not being subsidised by the poor smo who has to rent their investment AND pay tax too...

Subsitise first home owners and/or home owner mortgage interest and more people could AFFORD a place and not have to rent. Shift the stock of houses from the investors portfolio to the hands of the private citizen who wants to own and live in it.

As for anyone with 2 investment properties bleating about the increase of LCT... My heart bleeeds for you

[theplanner]

I agree that the rate cuts in too early. What we need is true tax reform but NONE of the pollies, left or right, have the balls to do it.

Tax law should be simple.

Earn money = pay tax

Make it flat rate so it is equitable across the board, Apart from say a $10k taxfree threshold, NO exemptions, write off, refunds, just a simple LOWER flat rate. No need to do tax returns....

While ya'll are bagging Rudd, remember that Howard did not have the balls to abolish negative gearing which is welfare for the rich by stealth. How much of your hard earned paid in tax goes to subsidise the guy across the roads rental?

Agree, what we need is a simple tax structure. One that is equitable, so the general masses don't waste their time devising ways to minimise or in extreme cases evade taxes and the government don't have to waste taxpayers money chasing the evaders. Imagine, if it were simpler the late Kerry Packer would have paid his taxes.

Simple Tax Structure = Win Win for all
Improve productivity

[h100vw]

$100k i reckon is a fair starting point for it.

Although maybe, for those that have "collections" the limit lowers and the tax increases for each subsequent car. And definitely increase it for luxury (no-essential) items, as someone suggested, leisure craft, helicopter, private jets. But alas all the people that actually own all these also have the money to have accountants that will manage to minimise the tax they pay anyway.


I saw this happen a few years back when the UK government increased the cost of road taxes for trucks, a large percentage of the hauliers rented an office in southern ireland and re registered all their trucks there. guess what happened next?

Yeah, Eddie Stobart fitted extra tanks to his trucks so they could fill up on the continent and save money on fuel.

The UK has just had a big tax change on cars based on emissions. Not popular
Gavin

[jayjay]

mm, there'd be riots here.. my old commodore on a really really REALLY good day, sits on about.. 14l/100. i'm not to fussed cause we're moving to diesel very soon, but imagine every die hard v8 fan not being able to drive their pride and joy..

[gareth_oau]

mm, there'd be riots here.. my old commodore on a really really REALLY good day, sits on about.. 14l/100. i'm not to fussed cause we're moving to diesel very soon, but imagine every die hard v8 fan not being able to drive their pride and joy..

14 Jayjay? 14? i dreeeeam of getting 14 My main drive is a 375KW FPV GT-P, and I average 19L/100, and sometimes get instantaneous readings of 99.9L/100

[richdave]

Simple Tax Structure = Win Win for all
Improve productivity

Amen Brother!!! Although there are a lot of accountants anw lawyers who make their living from our complex and inefficient tax laws... We can always re deploy them to something useful.... like fish food

[neil]

We all pay Luxury car Tax, it doesn't matter what type of car you own.

How many 100's of statemans are running around Canberra for the follies.
Its the general public which will foot the bill for their privilege.

[R36 Dreamer]

We all pay Luxury car Tax, it doesn't matter what type of car you own.

How many 100's of statemans are running around Canberra for the follies.
Its the general public which will foot the bill for their privilege.

With the fleet discounts the govt gets, I reckon a statesman would be under LCT, though Caprices are a different story.