Private vehicle tax deduction, a hypothetical

[flappist]

With all this doom and gloom over the local car industry I have thought of an idea to help improve sales and maybe get us back on track.

Every vehicle sold here in Australia has some local component.

For some it is very minor with just the handling, delivery and warehousing.
For others; Falcon, Territory, Commodore, Camry etc. it is quite significant.
Another forgotten group are the LHD conversion specialists who are almost always much more than 50% Australian and the custom vehicle builders e.g. Herrod with the DJR or KPM with the Streetfighter etc.

Commercial entities have always been able to claim vehicles against taxable income which of course has never been used to buy FPV/HSV/whatever as a "commercial vehicle".

So, in order to promote "Australian Made" to private PAYG people here is my cunning plan.

Each vehicle, to be elligible, declares the "Australian made percentage" of the selling price.

After the purchase that amount is available to be claimed as a tax deduction against PAYG income up to a percentage of total income over 3 years.

e.g. in a simplistic example:
The Flapmobile sells for $50k.
It has a 40% Australian component which provides a $20k claim.
You earn $50k gross a year and pay $10k tax.
For 3 years you can claim $6666 off your taxable income so you only pay tax on $43,333 which is this simple case is $8666 so you get a free $1333.
So effectively you get a $5k or 10% discount ON TOP of what ever you can negotiate.
If the Flapmobile was 80% you would get double that.
N.B. before the accountants and tax experts go bezerk these are very simple numbers to get the concept across only.

This applies to new cars that are privately registered for private use only and is limited to one car per tax payer.

If you want to buy a non Australian or second hand car you are not really any better or worse off than you are now but should you choose to buy Aussie you are effectively deciding where your tax dollars are going in the same way that some currently donate to charities or churches.

[deesun]

Though I have bought 2 demos this sort of enticement may tip me onto the new car market.

[Lotte]

This would straight up get me in a new car. No questions asked.

[Buntz]

I have thought about something similar. But only that locally made cars have their rego halved.

[Dash_XR]

That's a great idea.

Ironically because it's such a good idea I can't see the Australian government having anything too do with it.

[imugli]

Absolutely not. Governments should interfere as little as possible with the free market. If the free market cannot supply an Australian made vehicle with the features I want, in the package I want, at a price that is competitive andat the same time profitable for the manufacturer to make, then so be it. It is not the government's job to make uncompetitive industries competitive by way of artificial means.

[Wretched]

not unless the government own their own car manufacturer.

[Dash_XR]

Originally Posted by imugli

Absolutely not. Governments should interfere as little as possible with the free market. If the free market cannot supply an Australian made vehicle with the features I want, in the package I want, at a price that is competitive andat the same time profitable for the manufacturer to make, then so be it. It is not the government's job to make uncompetitive industries competitive by way of artificial means.

Australia does not have the manpower or resources to be competitive in any market.

Should we therefor wait till nothing is produced here anymore? That's the problem, "I want" "I want" "I want" with no thought of the future or anyone else.

[GTP534]

I think the term "Free Market" is a bit of a misnomer. We've all read how Australia has the rough end of the pineapple with Free Trade Agreements.

[flappist]

Originally Posted by imugli

Absolutely not. Governments should interfere as little as possible with the free market. If the free market cannot supply an Australian made vehicle with the features I want, in the package I want, at a price that is competitive andat the same time profitable for the manufacturer to make, then so be it. It is not the government's job to make uncompetitive industries competitive by way of artificial means.

Hmmmm.

Governments should interfere as little as possible with the free market?

Ok, no more unemployment benefits.
No more awards.
No more preventing cheap labour coming here.
No more protection for employees against unfair dismissal.
No more unions.
No OH&S.
No more mandatory sick leave, holiday pay, workers comp........

It seems to work well in Bangledesh.

Are you really sure this is what you want?

[Lotte]

Originally Posted by imugli

Absolutely not. Governments should interfere as little as possible with the free market. If the free market cannot supply an Australian made vehicle with the features I want, in the package I want, at a price that is competitive andat the same time profitable for the manufacturer to make, then so be it. It is not the government's job to make uncompetitive industries competitive by way of artificial means.

You seem to be under the illusion Australia operates on a true free market. It doesn't.
We're the only country with close to zero (if not zero) percentage tariffs,.and we're the only country that doesn't properly subsidise vehicle development.
We're on an uneven playing field and we're certainly not part of a free market.

[Kevxr8Leexr6]

effectively deciding where your tax dollars are going in the same way that some currently donate to charities or churches.[/QUOTE]
personally I think this has a lot of merit. similar in affect to marketing other aussie made goods. buy aussie help the nation. but the quoted paragraph above . similar to clubs . each year 1% of annual turnover (CDSE) is farmed out to local sporting,charitys etc.

the pros of this are valid.
payg workers upgrade to new car- 2nd hand market could be offset in a lower % tax concession for taking on aussie made product .
the tax concession dollars saved would be re spent in aussie
list goes on and on

[Yellow_Festiva]

If there was a small / medium Flapmobile in this scheme I would buy new with my next purchase.

[Dash_XR]

Originally Posted by Lotte

You seem to be under the illusion Australia operates on a true free market. It doesn't.
We're the only country with close to zero (if not zero) percentage tariffs,.and we're the only country that doesn't properly subsidise vehicle development.
We're on an uneven playing field and we're certainly not part of a free market.

Some of those tariffs aren't even close to being fair or competitive, I honestly don't know how our government even approved them.

[Lotte]

Originally Posted by Dash_XR

Some of those tariffs aren't even close to being fair or competitive, I honestly don't know how our government even approved them.

Agreed 100%

[flappist]

Originally Posted by Yellow_Festiva

If there was a small / medium Flapmobile in this scheme I would buy new with my next purchase.

Ah the Flapmobile uses a quantam infinite improbablity generation matrix.
The less probable that it will be exactly what you want to buy the more likely you will find it already sitting in your garage......

(apologies to DA)

[mik]

Originally Posted by imugli

Absolutely not. Governments should interfere as little as possible with the free market. If the free market cannot supply an Australian made vehicle with the features I want, in the package I want, at a price that is competitive andat the same time profitable for the manufacturer to make, then so be it. It is not the government's job to make uncompetitive industries competitive by way of artificial means.

The government has already done a good job of interfering and making our industry and car makers uncompetitive, also the cheap labor countries with a competitive edge would not be if igovco had not continually given them more advantage,
the way I see it any opportunity to even the stakes a little, even if it means making imports more expensive over a period of time will be a good thing, even if there is a bit of unhappiness for those wanting the cheap import.

[Kable72]

Originally Posted by imugli

Absolutely not. Governments should interfere as little as possible with the free market. If the free market cannot supply an Australian made vehicle with the features I want, in the package I want, at a price that is competitive andat the same time profitable for the manufacturer to make, then so be it. It is not the government's job to make uncompetitive industries competitive by way of artificial means.

The government has already messed with the free market as it has completely destroyed any sort of protection we had for our manufacturers. Every other country has policies and tariffs in place to protect their nest eggs while we do not. No wonder we can't make a car that is both profitable with all the features you want because all of these other countries can sell their cars here for chump change whereas if we were to sell our cars in those countries, there would be so much red tape involved it's laughable. Not only that, if we were to pass all the legislation, our 35k falcon would cost a small fortune and no one would buy it anyway because of the tariffs.

[GT2]

I've always wondered about an even more simplistic approach in times of economic hardships.
Together with the reserve bank tax cuts, reduce the GST on Australian made motor vehicles and building materials.
In your example Flappist, you could have a GST exemption on the 20k local content.

[imugli]

Ok, no more unemployment benefits.

Unemployment benefits should be for those who are physically or mentally unable to hold down a job. For anyone else, they should have a time limit.

No more awards.

To a certain extent, that's what's happening anyway. Ford are shutting up shop, Holden will be next and Toyota will follow. Other manufacturers are doing the same. Ford are moving the bulk of APAC production to Thailand, where the award rate is far lower than here. The government isn't legislating this, the market is. It is too expensive to produce these goods at a price that is competitive and profitable at the same time.

No more preventing cheap labour coming here.

They don't have to prevent them coming here. It's cheaper to import stuff from where they make it. Unless you're in construction or mining etc where labour is actually required on the ground.

No more protection for employees against unfair dismissal.

If I own a business and want to fire someone because they don't fit the culture, or because they do something stupid (though not illegal), or because it's just not working out, I shouldn't have to go through 3 warnings then 10 rounds at fair work Australia to do it.

No more unions.

One can only hope...

This idea that we can continue to have our wages increase by 3 or 5% every year, have conditions continue to improve and STILL be competitive against lower wage, developing nations in areas like manufacturing is rubbish. Even the US doesn't have some of our ridiculous conditions.

Tell me why it costs a cafe owner twice as much to have someone deliver you a coffee on Sundays as it does on a Friday?

Tell me why anyone should be guaranteed a 3 or 5% wage increase for the next 5 years just for showing up, regardless of their performance on the job?

Tell me why I should have to have a union ticket to get a job on some worksites?

Tell me why, if I'm happy to take $2 or $3 less per hour to do the same job as someone that isn't, I shouldn't be able to go to my boss and make that arrangement directly?

I'll say it again. It is not the Government's job to artificially prop up industries that have not been able to develop to the point where they are competitive without needing assistance, both in the short term and in the long term.

As someone else in another thread has said, the Govt should be putting money that they would give as subsidies to uncompetitive industries into education and assistance for businesses to restructure into industries that we can be competitive in, now and into the future. Even with our ridiculous, union dominated, HR laws.

Unions make up 16% of the working population in this country, yet basically write the HR laws and it's unsustainable.

If we take your "Lets make Aussie cars tax deductible" theme further - why not make EVERYTHING produced in Oz tax deductible? Are you suggesting other goods manufactured in Oz (textiles for instance) aren't as important as Cars, and that the government should favour the car industry over textiles? Or are you suggesting that they SHOULD make everything produced in Oz tax deductible?

My position is obviously an unpopular one in this protectionist dominated thread, but that's OK.

[imugli]

Originally Posted by Kable72

The government has already messed with the free market as it has completely destroyed any sort of protection we had for our manufacturers.

The opposite is in fact the case...

The government reducing tariffs and protection is in fact the government REDUCING their interference in the market.

[mik]

indeed govco has removed all chances of a level playing field with other trading countries that seek to take advantage of us, and they are doing so as we speak and have done for years , hence manufacturing has one foot in the grave.

[Lotte]

Removing tariffs may be "removing" government involvement in the industry, it doesn't make it a free market however, when other countries have not done the same, making an unequal import/export playing field.

[Smoke Pursuit]

Nope...

But in saying that if you buy an Aussie luxury car, e.g. FPV / HSV you should not have to pay Luxury car tax.. I have been saying it for years, if the government were serious about local manufacturing then they would have made sure that aussie built cars were LCT exempt.

[Lotte]

Originally Posted by DASH GT

Nope...

But in saying that if you buy an Aussie luxury car, e.g. FPV / HSV you should not have to pay Luxury car tax.. I have been saying it for years, if the government were serious about local manufacturing then they would have made sure that aussie built cars were LCT exempt.

YES!! This is exactly what is preventing me right now from buying a new GT. I can afford the car. Not the bloody LCT though.

[janddbone]

Australian Governments should commit to 300,000 Australian made sales a year.

All government departments,
All rental cars,
All Taxi and hire cars,
All sales that are GST exempt,
should be Australian made where available.

Also local cars should have their,
Petrol excise lowered to 10c/L
Luxury car tax exempt.

The 5% tariff should remain and the funds used to offset spending required to comply with future fuel economy and emission regulations going forward.

[flappist]

Guys please keep it on topic which having the Australian component of the capital expense of a private purchase of a motor vehicle become claimable against PAYG.

The purpose is a sort of "stimulus" to assist private people in purchasing Australian made product for their own use.

[Crazy Dazz]

Originally Posted by flappist

Hmmmm.

Governments should interfere as little as possible with the free market?

Ok, no more unemployment benefits.
No more awards.
No more preventing cheap labour coming here.
No more protection for employees against unfair dismissal.
No more unions.
No OH&S.
No more mandatory sick leave, holiday pay, workers comp........

It seems to work well in Bangledesh.

Are you really sure this is what you want?

Putting aside subjective issues around cars and manufacturing in general, and the political issues around monetary policy and exchange rates,
THIS is a huge issue.
Even if we somehow magically evened out all the other issues, a contributor factor to these lower costs in developing countries is the appalling conditions there workers endure, including child labour. I have worked on projects in SE Asia where the workers risk life & limb for a few dollars a day, and seen the results of their appalling safety standards. It’s morally contemptible for us to furnish our lifestsyles with these cheap goods,
AND it also means that even if everything else was balanced out we CANNOT have a free market.

[Franco Cozzo]

Problem is what cars are made here don't really take my fancy, so when I come to buying another new car, chances are it wouldn't be Australian made.

I wouldn't really be after Falcon, Commodore or Aurion/Camry.

But I do support the idea, maybe even cheaper rego for Australian made vehicles, in the case of states like QLD where they have rego price based on engine size, have anything Australian made registered at the lowest price.

[jpd80]

Seems the reason we can't export in our region is because most of our neighbors have put up the "full" or "not made here" sign...

While we have free trade agreements with Thailand, perhaps we should reciprocate the taxes imposed on out export vehicles there,
Over 2.0 liter to under 3.0 litre = 33% of RRP
Over 3.0 litre = 66% of RRP.


And for the record, I would welcome any moves on taxation that encourage people to buy Australian made.
The difference between the USA nd Australia is that the Americans still value "made in America",