A loophole in Australia’s tax law effectively subsidises large utes such as Ram and Chevrolet pick-up trucks by avoiding the Luxury Car Tax (LCT) that other imported vehicles pay, regardless of if the vehicles are used for work, recreation or just commuting.

The $250 million cost of this subsidy is more than ten times the Federal Government’s Active Transport Fund for the construction and upgrade of cycle paths every year.

Key Findings:

• Luxury car tax is paid on the sale or importation of most cars valued above $81,000.
• However, any vehicle that can carry twice the weight in payload that it can carry in people, is exempt regardless of what it is used for.
• Non-luxury utes, used by most tradies, sit below this threshold and would be unaffected by the removal of the luxury ute loophole.

“The Australian public is subsidising big, dumb utes by hundreds of millions of dollars each year,” said Rod Campbell, Research Director at the Australia Institute.

“These vehicles are damaging roads, reducing safety and increasing emissions, yet they are given a massive tax break.

“Removing the luxury car tax exemption will not affect most ute drivers, particularly tradies.

“Instead it targets those buying large luxury vehicles, worth sometimes hundreds of thousands of dollars, for personal use.

“Economics 101 says that governments should tax things they want less of, and subsidise things they want more of, and it is stunning that the Australian Government seems to want more big, dumb utes.

“This tax break for luxury utes costs more than ten times the Government’s fund for assisting the states to construct or upgrade bicycle paths, the Active Transport Fund.

“Big utes impose considerable costs on society, whether it’s safety concerns or the impact on our roads and climate. Removing the luxury car tax exemption for these vehicles is a good first step in accounting for these costs.”