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TPP ratification to lead to cheaper duty-free cars

Holden and Ford are among winners as Mexico and Canada become import tax-exempt.
Neil Dowling
Contributing Journalist
GoAutoMedia

1 Nov 2018 • 4 min read

New-vehicle buyers could be up for a Christmas saving as the federal government has agreed to dump a five per cent import tax on cars from certain countries.

The deal, under the Trans-Pacific Partnership (TPP), could save more than $1000 on a car that sells for $30,000 - but only if it comes from a country with which Australia has a free-trade agreement.

The removal of the five per cent import duty, which has been in play since 2015, on new vehicles will now allow a price reduction on models sourced from Mexico and Canada.

These two join Thailand, Japan and Korea, who already have free trade agreements (FTAs) in place and the import duty removed.

Australia imported 7930 vehicles from Mexico this year, including the Holden Equinox, Volkswagen Tiguan Allspace and Audi Q5.

Canada will make the Ford Endura - expected to be launched here next month - which will also be import tax-exempt.

However, several countries have not signed an FTA with Australia and, as a result, their vehicles still have the import duty. These include the EU - with Germany, the UK and Spain together selling more than 108,000 of its vehicles in Australia this year - and the US, which sold 33,221 vehicles here during the same period.

Year-to-date VFACTS sales data shows that more than 27 per cent of vehicles imported into Australia carry the import duty charge, while 72 per cent enter without a tax penalty. The remaining one per cent is the carryover Australian-built cars sold during this year.

Australia imported 7930 vehicles from Mexico this year, including the Holden Equinox, Volkswagen Tiguan Allspace and Audi Q5. Australia imported 7930 vehicles from Mexico this year, including the Holden Equinox, Volkswagen Tiguan Allspace and Audi Q5.

The Australian Automotive Dealers Association (AADA) confirmed that the import tax on cars raised $470 million in the 2017 financial year.

It also said that following the end of domestic vehicle manufacturing, "there is no justification to impose a tariff on a vehicle sourced from a non-FTA country."

The AADA said the removal of the five per cent tariff and the Luxury Car Tax (LCT) could save consumers almost $5 billion on the price of new cars.

Australia's automotive industry body, the Federal Chamber of Automotive Industries (FCAI), said the new agreements would lower prices of the latest automotive technologies for Australian consumers and enhance opportunities for exporting Australian technology.

Should the federal government remove the import duty and Luxury Car Tax (LCT) on all imported new vehicles? Tell us what you think in the comments below.