Cheaper European electric cars on the horizon in Australian trade talks: report

Australia’s luxury car tax could be eased for electric vehicles, thanks to pressure from the European Union.

A new trade deal between Australia and the European Union (EU) could result in more affordable electric cars, according to a senior government diplomat.

Trade Minister Don Farrell, who is currently in Europe to negotiate a deal with the EU, says Australia’s luxury car tax (LCT) was on a list of demands from officials in the region. The Sydney Morning Herald reports.

The LCT levies a 33 percent tax on every dollar over the threshold for new cars, which is currently $71,849 for most vehicles and $84,916 for fuel-efficient models, increasing to $76,950 and $ 89,332 respectively. as of July 1, 2023.

“One option we need to consider is to lift that ceiling for electric vehicles,” Minister Farrell said.

“So that’s an area where I think we’re prepared to have realistic discussions with the Europeans.”

Any deal appears to hinge on whether the EU is prepared to lower barriers for Australian beef, lamb and wine producers to sell in the region.

Chief among the EU’s requests is that Australians stop calling Parmesan cheese and prosecco wine by those names, unless the products are actually sourced from those areas of Europe; likewise, sparkling white wine can only be known as champagne if it comes from the Champagne region. region of France.

While most electric cars below the LCT threshold are made in China, Japan, and South Korea, only a few are from Germany, Sweden, and France, and most battery-powered models above the LCT threshold They are made in Europe.

Despite several tax reviews recommending the abolition of the LCT, the tax generates more than $700 million in revenue for the Federal Government each year, according to the report.

If a trade deal is struck between Australia and the EU, it means luxury electric cars could become more affordable.

Ben Zacharias

Ben Zachariah is a seasoned writer and automotive journalist from Melbourne who has worked in the automotive industry for over 15 years. Ben was previously an interstate truck driver and completed his MBA in Finance in early 2021. He is considered an expert in the area of ​​classic car investing.

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