Tariff Hype Clouding Car Industry Debate


Debate on the future of the automotive industry has become too narrowly focussed on the level of tariffs on imported cars, according to the Australian Automobile Association. The national motoring body has supported calls last week by the South Australian Premier and Access Economics for a review of the wholesale sales tax system.


Triple A Executive Director, Lauchlan McIntosh, said today that revisions to the tax system should include a lower rate of tax on small, fuel efficient cars and those with superior safety and emissions performance since the fundamental objective of automotive industry policy should be to ensure that consumers have access to the safest and environmentally cleanest new cars at an affordable price.


He said it was well established that greenhouse gases were directly related to the amount of fuel used, yet the fuel consumption of new vehicles in Australia was not much better than in the 1970s and remained among the highest in the world.


"In today’s highly price-sensitive new car market, models incorporating the latest safety, emissions and fuel efficiency technology are competitively disadvantaged because of the additional cost. Where is the incentive for manufacturers to produce such vehicles or for consumers to buy them?


"Granting a tax break to manufacturers which can demonstrate their products offer significantly better safety and emissions performance, rather than simply meeting minimum requirements, would provide an excellent incentive," Mr McIntosh said.


He said safety and environmental performance were key parts of the terms of reference for the Industry Commission’s current inquiry into the automotive industry and it would be disappointing if these important issues were overlooked in the hype of tariff reform.


"Any assistance given to the industry should be contingent on achieving world’s best practice in these areas," Mr McIntosh added.

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