Why does Tesla in Australia incur the luxury car tax?

Introduction to Australian Luxury Car Tax

The Australian Luxury Car Tax (LCT) is a significant financial burden for high-value car purchases. According to Wikipedia, the current LCT threshold for the 2019-20 financial year is AUD 67,525.00. However, for fuel-efficient cars, the threshold has been increased to AUD 75,526.00. This threshold ensures that even Teslas with a value significantly above this amount are subject to this tax.

Impact on Tesla's Market Share

Almost all cars valued over AU77,000 are subject to the LCT. This includes higher-end Tesla models such as the Model S and Model X. If these cars were not subject to the LCT, it might imply that the government’s taxpayers are subsidizing the purchase of luxury vehicles for wealthy individuals. Such policies are often criticized and can be detrimental to the government's popularity and electoral success.

Tesla's Position in the Market

Tesla's luxury car tax is a notable aspect of its market in Australia. As EVs (Electric Vehicles) gain popularity, governments must balance economic interests with environmental goals. In the case of the Morrison government, the decision to enforce the LCT on Tesla models reflects a broader economic strategy that prioritizes certain industries over others.

The Morrison Government's Approach

As a former expatriate living in the UK, one can only marvel at the Morrison government's policies. For instance, the government continues to classify coal as a clean energy source, despite scientific consensus indicating otherwise. The Morrison government's policies on coal are rooted in the economic importance of the coal industry to Australia, particularly in terms of exports. While the government acknowledges the existence of "clean coal," the reality is that coal remains a highly polluting energy source.

Taxation of Electric Vehicles

In the case of electric vehicles (BEVs), the situation in Australia is even more complex. The government classifies BEVs with a landed cost over a certain threshold as a luxury item. This policy creates a barrier to entry for consumers interested in purchasing high-end EVs, making them financially prohibitive. The high taxes on BEVs can be seen as a means to raise additional revenue, but it does not serve the best interests of the citizens of Australia, particularly those aiming to reduce their carbon footprint.

Risks of Dependence on Coal and Biomass

The Morrison government's continued reliance on coal and biomass has implications beyond simply raising revenue. With the advancements in clean energy technologies, such as nuclear power, the government's heavy investment in coal and biomass can be seen as shortsighted. For instance, Australia has a reactor overhead of nuclear power, which could provide a sustainable and emissions-free energy source. Instead, the government's focus on coal and biomass suggests a resistance to change and a preference for well-established but environmentally harmful industries.

Conclusion

Understanding the luxury car tax on Tesla in Australia requires a broader examination of the Morrison government's economic policies and their environmental implications. While the tax serves to raise revenue, it also hinders the adoption of low-emission technologies and can create a disincentive for consumers to purchase more environmentally friendly vehicles.