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Audi says tax defeat a win for motorists -

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Audi says tax defeat a win for motorists

The World Today - Thursday, 4 September , 2008 12:14:00

Reporter: Brigid Glanville

ELEANOR HALL: Luxury car makers say the Senate's defeat of the $550 million luxury car tax is a win
for Australian motorists.

Audi says the luxury car market is already highly taxed and that the proposal would have sent car
sales down by 15 per cent.

But the company's managing director, Joerg Hofmann, told Brigid Glanville that Audi would support a
tax on cars that are high polluters.

JOERG HOFMANN: Well of course Brigid, we are more than happy today. As you know we were 100 per
cent opposing that proposal.

For the last four months we were battling hard together with our automotive industry body, the
FCAI, and we have basically finally succeeded and stopped that unfair law. I think it's a great day
today for Australia, I have to say.

BRIGID GLANVILLE: If that tax had gone through, what would that have meant for your business and
customers and the luxury car market?

JOERG HOFMANN: First of all, a car in Australia is already one of the most taxed goods, you know,
and Australia is a country which heavily relies on transport, on mobility of people, farmers, rural
people. They all have to move somehow.

And our cars, a luxury car could be basically 30 per cent cheaper if all the tax would be taken
away from the car and the luxury car tax of 25 per cent is by far already much too high.

BRIGID GLANVILLE: If a car for example, a $60,000 car would have had that luxury car tax on it, how
much would that car have then cost?

JOERG HOFMANN: Well I think the impact, we made a couple of calculations, the impact would be about
$2,000, $1500 to $2,000. And then it gets of course more expensive as more expensive the car is.

BRIGID GLANVILLE: Audi has been paying the luxury car tax though since the Budget.

JOERG HOFMANN: Right.

BRIGID GLANVILLE: How much would that have cost the company if that tax continued?

JOERG HOFMANN: See, we built provisions and set aside provisions in the, I don't, cannot give you
the exact number but in the range of about, well, multi-million dollar. It was certainly more than
$5 million provisions that we put aside.

And Brigid, see, this showed basically our faith in having a chance to beat the legislation because
we believed from the beginning it's unfair, it's unfair for Australian customers. And well, our
approach was, well if it's unfair and if we believe it's not right and has to be stopped, we wanted
to support our customers and take the uncertainty away from them. That's the reason why we put
$5million-plus provisions aside.

BRIGID GLANVILLE: Will you get that money back now that you've already payed?

JOERG HOFMANN: The way it worked, you didn't have to pay it yet because the legislation was not in
place. Remember there was never a law; it was just an announcement, it was a proposal. We just had
to put provisions aside but we didn't physically pay it yet to the ATO.

BRIGID GLANVILLE: Five-hundred-million-dollars luxury car tax, you know, it's a large amount of
money. Are you concerned that it will come back in another form?

JOERG HOFMANN: Well again, we believe this tax is unfair and I think it will certainly not come
back in the way it was proposed. It would certainly not come back in an increase of the luxury car
tax.

This is I think gone and dead. I believe what may happen is that the Government and the Coalition,
the Opposition may think about smarter ways, how to help the environment, how to do environmental
friendly policy.

BRIGID GLANVILLE: How would Audi feel if a tax came in that exempt low emitting cars?

JOERG HOFMANN: That's alright. I mean, our brand is famous for leading technology, for innovations.
Our diesel engines are one of the most fuel efficient in the world. It's nothing unusual and we
certainly would deal with it easily, and more importantly, this was certainly a much fairer and a
much more reasonable approach than just increasing a tax called luxury car tax which has nothing to
do with luxury.

BRIGID GLANVILLE: What would have happened to the luxury car market if this tax had gone through?

JOERG HOFMANN: We were running some numbers which indicated to us that the market would have gone
down by about 15 per cent and if you just see last month, August sales result in our segment it was
basically, Audi, we had still a very successful month because of our campaign obviously, but our
competitors were heavily suffering and the market was down by 30 per cent, even.

So I guess it clearly shows you where the direction was about to go.

ELEANOR HALL: That's Joerg Hofmann, the managing director of Audi Australia speaking to Brigid
Glanville.