This paper argues tax breaks for large, American-style utes cost Australians over $250 million in foregone revenue in 2023. 

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.
• Large vehicles impose considerable costs on society, from their higher carbon emissions and rates of road damage to serious safety concerns.
• Non-luxury utes, used by most tradies, sit below this threshold and would be unaffected by the removal of the luxury ute loophole.