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Why is VW Taxed More than Other Brands?

gaycarboys - Alan Zurvas

Available from June, the Tiguan Allspace Wolfsburg Edition.

Volkswagen has one big range, there is no doubt about it. At last count there was 27 models available or close to launch.

Many years ago, the Australian government brought in a measure to protect local vehicle manufacturing. It was intended to brings imported brands onshore. It might surprise you to learn that Chrysler, Citroen, Renault, Nissan and many more, once made their cars right here. One by one, they closed, leaving only Ford, GM Holden, and Toyota.

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ABOVE: VW through the years

As Australian manufacturing gradually diminished, the tax was reduced to 5%, then Holden, the final car maker, closed its doors. However, the 5% tariff remained in some weird remnant of a protectionist cold war era.

In an article by the AAA, research showed that by reducing Australia’s average fleet age by just 1 year would:

  • reduce road crashes by 5.4%;
  • save more than 1,300 lives over the next 20 years;
  • deliver road trauma and emission reduction benefits worth $19.7 billion over 20 years; and
  • deliver $3.3 billion in direct savings to government over the same period.

It would be no surprise that reducing price help to get more people in to new cars. Newer cars have lower emissions, and are safer. Cars built before 2000 have few of the modern safety equipment like ABS and Airbags.

You might think this doesn’t make that much difference but older cars make up less than 20% of the modern fleet, but are responsible for 1/3 of road fatalities.

So, how did VW get left in the cold?

The Conservative government made free trade agreements with certain countries. Japan and Korean cars instantly dropped in price. Other brands benefited by increase trim level rather than a price drop.

There is no such trade agreement to make Volkswagens cheaper. The government could abolish the tariff tomorrow, but for some reason they haven’t. They Liberal party was also critical of the Luxury Car Tax, but have not abolished that either. The tariffs are not only unnecessary, but unfair.

Here are a few interesting facts to close:

  • VW is the only brand in the in the top 10 sellers, and top 120 model sales, to still be subject to the 5% tax.
  • VW Tiguan Allspace is the only VW free of the tax. Why?

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