EU trade talks and LCT abolition may yield savings for local electric vehicle buyers
A REPORT published by the Sydney Morning Herald says the price of electric vehicles in Australia could be ‘slashed’ thanks to trade negotiations with the European Union, as the federal government considers cutting – or even abolishing – the 33 per cent luxury car tax (LCT) for low-emissions vehicles.
The LCT threshold for fuel-efficient cars – those with an ADR Combined cycle figure of 7.0 litres per 100km or lower – and new energy vehicles has been the topic of fierce debate for several years. It will be lifted again from July 1, moving from $84,916 6o $89,332. The threshold for standard petrol- and diesel-powered cars will rise from $71,849 to $76,950.
Numerous tax reviews commissioned by the federal government over the past decade have recommended the abolition of the LCT, with automotive importers arguing that its elimination would ultimately benefit not only EU manufacturers but Australian consumers as well. However, luxury car tax generates more than $700 million annually.
Automotive industry and electric vehicle advocates have long argued that the tax is unfairly applied to ‘green’ models, limiting their success in the market. It is one of the topics of conversation for trade minister, Don Farrell, who is in Europe this week to advance the Australian-European Union trade pact.
“One option for us to consider is to lift that ceiling for electric vehicles. So, that is one area where I think we are prepared to have some realistic discussions with the Europeans,” said Mr Farrell.
However, Mr Farrell cautioned the EU that he will not sign off on a trade deal unless the region opens its markets to Australian beef, lamb and wine.
According to the report, both parties have confirmed that the yet-to-be-finalised agreement will include legally enforceable commitments on climate measures, gender equality, environment and labour standards, and the potential suspension of trade benefits if one of the parties breaches the Paris Climate Accords or the principles of the International Labour Organisation.
European Commission executive vice president, Valdis Dombrovskis, said a trade deal delivering win-win outcomes across the board was the “next logical step” in the partnership.
“We are now approaching the end game in our negotiations. This inevitably means the most difficult political issues are up for discussion such agriculture and intellectual property. Negotiations are tough and detailed, as they should be,” he said.
The report says that several members of the European Parliament are still concerned by Australia’s low-level climate ambitions and road maps to meet its 2030 climate targets and would like the deal to push for further action.
The trade deal is set to be finalised next month.
With The Sydney Morning Herald
Keyword: Aussie EV prices likely to be 'slashed': report