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More or Less Tax?

In Motoring News

By system on Friday, 22 August 2008

Every Australian new-car buyer could be hit with a carbon tax based on their car’s greenhouse gas emissions under a new proposal from Mercedes-Benz, that also includes scrapping the Luxury Car Tax.

The luxury brand argues it is time for the Federal government to get serious about CO2 emissions and follow the global move towards emission-based taxation.

It could mean a $1250 price rise on the top selling Holden Commodore in the first year and about $750 on a Toyota Corolla.

Mercedes put its carbon tax proposal in a submission to the Senate inquiry into the proposed increase in the Luxury Car Tax from 25 to 33 per cent, but argues that the move which would raise more than the $400 million over the three year target for the LCT, was not just a counter proposal to negotiate a re-think on the budget proposal.

The managing director of Mercedes-Benz Australia, Horst von Sanden, said “It is time to get everyone thinking about CO2 and exhaust emissions.” “We acknowledge the government has the right to look for new revenue streams. But we decided instead of just arguing against the tax we should come up with a new proposal.”

Most major car brands presented arguments against the LCT increase, and were joined by industry bodies including the Federal Chamber of Automotive Industries. Mercedes-Benz compiled its carbon tax proposal with a staged introduction which would more than offset the potential gains from the LCT. It also believes that the downturn in luxury car sales since the end of June means the proposed increase could easily be wiped out, just as an increase in the 1980s was revenue negative and eventually reversed.

Mercedes says the carbon tax, similar to one in Britain, must be introduced to force buyers and carmakers to think green. It believes the threshold should be set at 119 grams of CO2 per kilometre by 114, with a gross polluter level set at 200 grams. Many luxury and performance cars today are at more than 300 grams.

The result of the Senate hearing is expected on August 26 and Mercedes is hoping for a move on a carbon tax by next year.