If you’re keen on your next vehicle purchase being a electric, the higher up-front cost could deter you or even put it out of reach of your budget.
Today, the largest single cost of an EV is it’s battery, which is in no way the fault of the buyer who chooses to buy a more environmentally friendly vehicle.
Something that causes unnecessary downward pressure on the adoption of EVs is the luxury car tax. While vehicle purchases also get hit with state-based stamp duty charges, it’s the LCT that is triggered by the car’s higher price tag.
Recently the LCT was lowered on ‘fuel efficient’ vehicles, but not by much. What this Change.org petition proposes, is a complete removal of the LCT, which would reduce the purchase price of EVs by thousands of dollars, ultimately making them more affordable, but more Australians.
The ATO lists LCT as a tax on cars with a GST-inclusive value above the LCT threshold, that threshold is now $75,526. LCT is imposed at the rate of 33% on the amount above the luxury car threshold.
When it comes to EV pricing in Australia, most are over $50k, but the most popular (by far) is the Tesla Model 3. In 2020, most electric vehicles available in Australia attract LCT.
Last year I paid A$3,734 in Luxury Car Tax on my Model 3 Performance (stealth), but things have moved on since then. In Victoria, a fully spec’d Model 3 would cost you $10,307 in LCT.
LCT is and will continue to hit all premium automakers as they roll out their electric vehicles in Australia, including Audi, Mercedes, Porsche and Jaguar to name a few.
By the time the Model Y and Cybertruck arrive in Australia, they too will be subject to LCT with an even higher expected purchase price than Model 3.
I see this as actually a massive opportunity for the Government to kill two birds with one stone. Not only could the Government achieve a higher EV uptake, but could also enable more people to afford autonomous driving safety upgrades like Tesla’s Full Self Driving package.
Reducing our road toll has been a mission of successive Governments for decades, but for the first time, there seems to be a technology solution that is evolving to the point where the safest car on the road, can drive itself.
While not there today, this FSD package would allow people to text and drive, be under the influence of alcohol, or be suffering from fatigue that would otherwise see them leave the road.
Tesla’s autonomous features today, already require much less effort from drivers to stay between the white lines and a safe distance to vehicles around the car. If Tesla does achieve their ambitions, along with other automakers, then driverless cars is something we absolutely want to be affordable to all.
With the recent increase in price, Tesla FSD package costs A$10,100, so I see one potential outcome where the Government at least waves LCT, if you purchase FSD-like safety upgrades.
Below is the full petition on Change.org which also includes hybrids in their pitch. Personally, I think hybrids are a very temporary proposition and actually don’t deliver on many of the benefits of a full switch to EVs will.
Luxury car tax was created by Federal Government in July 2001 (source: Wikipedia) in an attempt to save local car manufacturing and jobs. The idea being that a locally produced vehicle would be cheaper to purchase than an import with tax implications. This effort was unsuccessful, however to this day the luxury car tax remains on vehicles that fit the criteria based on price. Although the threshold has increased by $526 AUD in 10 years (source: ATO), it has failed to rationale hybrid and electric technologies, which at present are expensive to manufacture and are not currently produced in Australia for the general population.
We believe that the luxury car tax (LCT) should be abolished for EV/Hybrid vehicles as a direct incentive to purchase more environmentally friendly vehicles. United States currently still offer a federal tax credit as an incentive to purchase EV/hybrid vehicles.
Tesla have just released the Model 3 configurations, and even these stripped out basic versions can have up to $8.5k AUD on road costs (source: Tesla). These aren’t premium import vehicles, they are just expensive to produce. Abolishing the LCT could strongly incentivise those shopping for a new vehicle, to strongly consider the shift to EV and the future.
Short of any exclusive EV/Hybrid incentives, abolishing the LCT would be a great start to shift to a cleaner future.
It’s not clear how many signatures it’d take to have the Government stand up and pay attention to this appeal, but it’s something I really believe is possible. Removing LCT would have an impact on tax revenue, but that could potentially be recovered with an increase in sales driving further GST on the purchase, insurance and recharging.
Please take the time to go sign the petition and contact your local politician, the Deputy PM and Minister for Infrastructure, Transport and Regional Development, the Hon. Michael McCormack MP and the Prime Minister Scott Morrison.
Given what’s happening with protests and coronavirus right now, it’d be a smart move by any Government to respond to online campaigns for change, showing that is an effective technique to get attention, rather than physical gatherings right now.
More information and to support the petition, please head to Change.org