“Irrational” car tax adding $5 billion to new cars over next 4 years: AAA

June 26, 2018

Vehicle import tariffs were brought in to protect domestic Australian car makers, but as the Australian Automobile Association (AAA) points out the industry is now extinct, yet the 5% levy remains. The AAA called these taxes "irrational” and “damaging”. It estimates $5 billion will be added to the cost of new cars over the next four years.

Conservative Party leader Cory Bernardi supports the removal of the levy and has long been campaigning for that.

According to the AAA, the worst part is the government isn’t even receiving any overall economic benefit.

But by slashing import duties, they could save $3.3 billion directly.

The taxes also have knock-on effects. For example, slowing the take-up of more modern cars that are eco-friendly, fuel-efficient and safe.

Why? With higher vehicle purchase prices, fewer drivers can afford to upgrade their car.

We know this because the Australian car fleet sits around a decade old overall. Germany and France both have an average car fleet age of well under ten years. Older cars do not perform as well in crash tests, thanks to advances in construction and safety assists. Ageing vehicles also suffer from rust, meaning poor crash protection compared with the same car when new.

Senator Bernardi has told 2GB’s Luke Grant no one seems to be motivated to remove the levy.

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