Tax Hike Hammers Car Market and Government Revenue

3rd September, 2008

New figures show the proposed increase in the luxury car tax has had a devastating impact on new vehicle sales.

The Federal Chamber of Automotive Industries (FCAI) is deeply concerned about the proposal to impose a tax hike on motorists at a time when there are clear signs of an economic slowdown.

"There has been a 19 per cent fall in sales of cars above the threshold in August alone - further compounding the significant drop in sales experienced in July," FCAI Chief Executive Andrew McKellar said.

"If this trend is maintained, the Federal Government would lose more than half the revenue it projected it would reap from this tax hike," he said.

"This raises serious questions about why the Government is so determined to persist with charging families, particularly those in regional areas, even more to get to work and school," Mr McKellar said.

The automotive industry has also questioned the merit of some suggested amendments to the luxury car tax legislation.

"The number of cars to be exempt from the tax on apparent environmental grounds is extremely small and even fails to capture hybrid vehicles," Mr McKellar said.

"It could be as few as one-thousand vehicles that would be exempt, at a cost of little more than $1 million a year," he said.

"Frankly, if the Government secures passage of this legislation with this amendment somebody will have been conned," Mr McKellar said.

"This tax hike will also hurt the Australian vehicle industry," he said.

"The three local manufacturers, who directly employ more than 60,000 Australians, all have models that will be subject to this unfair and unnecessary tax grab," Mr McKellar said.

For further information contact:
Sheena Ireland, Communications Manager
P: 02 6229 8221
M: 0458 038 555
E: sheena.ireland@fcai.com.au

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