Cost of taxes and design rules restrictive to transport businesses
Stamp duty is a bad tax from a transport business perspective and should be reviewed or abolished altogether, according to NatRoad CEO Warren Clark.
And, along with Australia’s unique landscape, which increases redesign costs for manufacturers, heavy vehicles are more expensive in Australia than anywhere else in the world, restricting uptake of safer and more productive technology, he adds.
Clark cites think tank Grattan Institute’s State Orange Book 2018: priorities for states and territories document, which labels stamp duty as “inefficient”.
It proposes implementing a ‘property levy’ used in the ACT, expanding it to replace other inefficient taxes on items such as motor vehicle sales and insurance.
The institute notes that several states have taxes on motor vehicle insurance policies, which can deter people and businesses from purchasing an adequate level of insurance.
Replacing taxes on insurance and motor vehicle registrations with a broad-based property tax could make Australians up to $1.5 billion a year better off, according to the paper, which Clark says is a “compelling reason to get the stamp duty monkey off industry’s back”.
“Stamp duty should be abolished as it is an inefficient tax and is antiquated and out of step with a modern revenue system,” he says.
“This message has been underlined in all major taxation inquiries, including the Henry Tax Review, but has gone unheeded for too many years.”
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Clark notes that, along with stamp duty, the Australian transport industry bears other related costs due to “unique and perverse reasons … heavy vehicles are already too expensive in this country than elsewhere in the world”.
For example, to meet Australian regulations, heavy freight vehicles must be 50 to 100mm (2-4 per cent) less in width than vehicles in other major markets, which costs manufacturers $15-30 million per year to redesign, and can reduce the availability of safer, cleaner models.
“The Government has announced that this issue will be addressed but when you add this to poorly thought-out regulatory issues, the stamp duty costs of around another 3 per cent of the vehicle’s value on registration, you are looking at a situation that must be rectified.”
Clark’s ideas for reform include:
- if not a removal of stamp duty, then a cap or reduction in the percentage rate for stamp duty on heavy vehicle registrations
- the stamp duty regime to give incentives to purchase newer, safer vehicles, as is currently the case with the NSW exemption for registration of new heavy trailers
- stamp duty raised from imposts on heavy vehicles allocated directly to infrastructure spending that would benefit the heavy vehicle industry, such as the improvement of bridges to allow high-productivity vehicles better road access.
“The message is clear: stamp duty reform is long overdue. The heavy vehicle industry already pays too much by way of vehicle registration charges and the stamp duty impost adds salt to that wound,” Clark says.
“Heavy vehicle charges must be fair, transparent and sustainable and be stamp duty free. Abolition of stamp duty or its radical overhaul must be a priority.”