The Victorian Automobile Chamber of Commerce (VACC) is calling on the State Government to review its stamp duty on new and used cars.

VACC Executive Director, David Purchase, said the current stamp duty structure does not operate in the way it was originally intended when it was introduced 17 years ago. Now it penalises family car buyers.

Victorians are currently taxed 2.5% for cars up to $35,000, 4% for cars with a recommended retail price of between $35,000 and $45,000, and 5% for cars over $45,000.

“However, when the 4% tax rate was struck seventeen years ago, it was intended for luxury cars. In seventeen years, the average family car has crept into the 4% bracket – which was not the intention of the tax.”

“In comparison, the ACT, New South Wales and Queensland have a much fairer stamp duty tax on vehicle purchases,” Mr Purchase said.

“Queensland car buyers have the best deal with a flat rate of 2% of the purchase price.”
Mr Purchase said family car buyers were most affected when purchasing cars just under the tax bracket.

“The on-road costs of a car, with the inclusion of, say, a $60 set of mudflaps, can end up pushing the cost of a car over the $35,000 tax bracket, which then ends up costing that family an extra $500 in tax,” he said.

“This bracket creep is bad news for both consumers and dealers. It creates ridiculous situations where consumers cut back on safety items to keep under the 4% rate.”

Mr Purchase said $35,000 represented the current cost of the standard family vehicle.

“This level of vehicle should not be taxed so heavily. The 4% hurdle should have been revised upward in line with the rise in the cost of cars. The stamp duty of 4% should not kick in below $57,000 – in the luxury vehicle segment,” he said.

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*RRP Source Red book. New car dealer delivery fees are not included. Stamp duty is payable on retail price and dealer delivery fee.