The peak body representing franchised new car dealers is disappointed by changes made to the Luxury Car Tax (LCT) in the Mid Year Economic and Fiscal Outlook (MYEFO).
From the 2025-2026 financial year, the definition of a fuel-efficient vehicle under the LCT will be halved from a maximum consumption of 7L per 100km, to just 3.5L per 100km, says the Australian Automotive Dealer Association (AADA).
“These changes to the LCT have made a bad tax even worse,” says AADA chief executive James Voortman.
“The LCT is an outdated tax meant for a time when Australia still manufactured cars – it should have been abolished years ago, but now it’s being used to further tax fuel efficient cars,” he says.
“The Australian Government should be encouraging the uptake of fuel-efficient vehicles not increasing the tax on them.
“The best way the Government can use the LCT to achieve a 43% reduction in greenhouse gas emissions by 2030 is by abolishing the tax altogether.”
Voortmaan says this change will see the government claw back an additional almost $100 million a year from taxpayers by 2026-2027.
“It is inflationary and will dissuade consumers from buying vehicles with the best safety and fuel-efficient technology,” he adds.
“So many independent reviews and inquiries have called for the LCT to be abolished, but instead it continues to raise over a billion dollars a year at the expense of motorists and local industry.
“For years the automotive industry and motorists have been calling for a root and branch review of the automotive taxation regime, but instead we see damaging tinkering and absolutely no consultation with industry.”
