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The luxury car tax: Past its use-by date


There are increasing calls to abolish the luxury car tax (LCT) as it has passed its “use-by” date. The tax has been singled out as an unfair, a discriminatory and an inequitable tax that discourages innovation in the manufacture of environmentally friendly vehicles. Following the recommendations from the Henry Tax Review and the discussions at the 2011 Tax Forum on environmental and social taxes, the reform of the LCT could form part of a wider review of motor vehicle taxes and fuel excise in Australia. A tax on the purchase of motor vehicles could be structured to bring about a behavioural change in the choice of motor vehicles in order to reduce fuel consumption in motor vehicles, provide a competitive edge to the Australian motor vehicle industry, and generate the revenues required to build better public transport infrastructure.

Author profile:

Prafula Pearce CTA
Prafula is a lecturer at the Curtin Law School, Department of Business Law, Curtin University, where she has been lecturing since 1996, having previously worked 20 years in the tax profession in Australia and the United Kingdom. Her teaching and research interests are broadly in taxation law, including tax policy and corporations law. She has published widely in many areas of taxation, both nationally and internationally. Her current interest lies in environmental taxation relating to passenger motor vehicles and oil, the area of her PhD thesis entitled, Using tax and regulatory measures to reform choice and usage of motor vehicles for personal transportation in Australia for the sustainability of oil. Current at 01 April 2015
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