Luxury Tax

[interbear]

I don’t think Tesla are going to design or price their cars to come under whatever tax threshold applies in each of the countries they operate in, even less so in the UK which will be a smaller market for them vs USA or EU. Far too complicated for them in my opinion. Also, they understandably believe that their cars are worthy of a premium price in the market so will charge that price to maximise margin. With the thinking that those buyers willing to pay that premium price will suck up the local tax burden.

I think Tesla have read this one correctly.

 

[MrBadger]

I don’t think Tesla are going to design or price their cars to come under whatever tax threshold applies in each of the countries they operate in,

Ah, but they originally did. When specs and $ prices were officially announced around mid 2017, it was $35k for the car, LR battery was $9k, premium interior was $5k. No dual motor at that point, cannot remember about performance, but probably not as it would have been dual motor.

So an M3 LR would have been $44k without premium interior or $49k with., plus delivery.

Converting that at then $/£ pricing for Model S (iirc it was divide by 1.15), converted that to indicative pricing somewhere around £38k without premium and £43 with. That would also have given a base SR at just over £30k. All plus delivery and remember being not 100% clear whether the $/£ conversion being inclusive or exclusive of gov grant, then at £5k iirc.

But £ dipping and Tesla restricting options took the flexibility away from everyone. But it was certainly the intention 2 years back. The only good thing about the options originally chosen at initial UK launch was that they did not force the mid range battery on us instead of long range. Not sure if this option still exists - if it did, maybe will become the differentiator between AWD and P- ?

 

[Rob R]

How many sales of Model 3 are Tesla losing because of the Luxury Tax? Almost none.The idea that they should produce a special "taxbuster" model is ridiculous. They struggle hugely to produce different variations at all. Hence the loss of the LR RWD, arguably their best EV. That will have cost them sales in every market. The UK tax threshold is nothing.

 

[K-ev 1]

Im a mental health support staff and on basically minimum wage, ive scrimped and saved for years and was looking at under 40k but looks like I will need another few k to get my dream, however the hyndai and kona are appealing but still I will be going for the model3 but it will be more 2021 now

 

[Terry_B58]

Im a mental health support staff and on basically minimum wage, ive scrimped and saved for years and was looking at under 40k but looks like I will need another few k to get my dream, however the hyndai and kona are appealing but still I will be going for the model3 but it will be more 2021 now

There is also the Kia E-Niro, but by 2021 there will be other marques available and the 'Luxury Tax' limit may well have been raised.

 

[Mark_T]

This isn't about luxury, it is about getting tax revenue from cars that don't pay duty on fuel.

It will go away in time, but only once they have got a working method to add additional tax to electricity used for the cars.

The means to do it is there via smart meters, just need to complete the rollout...

 

[Terry_B58]

This isn't about luxury, it is about getting tax revenue from cars that don't pay duty on fuel.

VAT was once upon a time a Luxury Tax (Value Added), but now it covers many more items. Unfortunately, history shows that Taxes do not go away, they may change their name, but they tend to stay.

The means to do it is there via smart meters, just need to complete the rollout...

I think all home chargers are now supposed to be 'Smart' so it is possible to itemise each charge.

 

[Mark_T]

VAT was once upon a time a Luxury Tax (Value Added), but now it covers many more items. Unfortunately, history shows that Taxes do not go away, they may change their name, but they tend to stay.

VAT was never intended to be a 'luxury' tax, it simply taxed the value added at each stage of the manufacturing or service life cycle and at its introduction there was a single flat rate.

Purchase tax which it replaced did have a luxury base for the different rates.

Things change over time of course, but right from the start VAT covered a wide range of goods and services and had nothing to do with 'luxury'.

 

[goRt]

VAT was never intended to be a 'luxury' tax, it simply taxed the value added at each stage of the manufacturing or service life cycle and at its introduction there was a single flat rate.

Purchase tax which it replaced did have a luxury base for the different rates.

Things change over time of course, but right from the start VAT covered a wide range of goods and services and had nothing to do with 'luxury'.

Vat was an is a tax on luxuries, the definition of luxury has widened over the years.

 

[MrBadger]

It won’t be long before road use pricing will be talked about. So people who drive further and/or peak times of day will pay the higher amounts.

 

[pjuk]

It won’t be long before road use pricing will be talked about. So people who drive further and/or peak times of day will pay the higher amounts.

It’s already there: congestion charge. The PAYG method could be implemented as a simple yearly odometer reading multiplied by a cost/mi based upon emissions of the car (+ an additional weighting on how much your car is worth )

 

[navt]

This isn't about luxury, it is about getting tax revenue from cars that don't pay duty on fuel.

Not true. Petrol/diesel and alternative fuel all subject to this additional new vehicle tax.

It is also incorrect to refer to it as luxury tax.
Vehicle tax rates

 

[K-ev 1]

Test drive ordered for this Thursday with kia eNero limited to 30 minutes test ? How on earth can we have a real test in 30 minutes?

 

[pgkevet]

Test drive ordered for this Thursday with kia eNero limited to 30 minutes test ? How on earth can we have a real test in 30 minutes?

Generally you can IMO. It depends what you're looking for. I've test driven nearly ever 4x4 and cross-over with my OH recently (she panics with only half a tank of fossil on board and wonl't use my MS for more than local driving). Her priority was a seat comfortable for her so a lot of cars were eliminated in minutes or even just in the showroom. Since I may have to drive it (rarely) I had to be able to manage in any car she picked. The one she liked most was a jag i-pace but it got eleminated because it was just dangerous for me - I couldn't get my size 14 feet from accelerator to brake easily (the only car I've ever driven with a bulkhead restriction right above the feet)
When I test drove the MS it wasn't more than 30 mins. I'd done most of my research and read the manual beforehand. The test drive was again to see if it was comfortable, maneuverable, stamp on the accelerator and stamp on the brakes. It then took about 4 weeks to really understand the car, find all the things i hate about it and the things that are good. A 24 or even 48 hr test drive wouldn't tell you that or how easy/hard it is to get niggles fixed.

Now if someone could figure out how to mount f-ype jag seats into an MS I might orgasm.. they were really comfortable for me - just no room in the cockpit for my height.

 

[PrGrPa]

Test drive ordered for this Thursday with kia eNero limited to 30 minutes test ? How on earth can we have a real test in 30 minutes?

I tried the eNiro a couple of weeks back. It was good. Simple inside, and all the fun of electric driving. Enough room in the rear and boot. Make sure you try ‘sport’ mode. The dash design changes and it feels quite different from ‘regular’. The regen was a bit lighter than a Tesla, even at the max setting.

Though something of a surprise to hear that there’s no reservation process and I couldn’t buy one until 2020. Possibly. Gives the lie to suggestions that folks are nervous, uncertain, or unwilling to buy EVs. I’m a little surprised that Kia, Hyundai, and the press haven’t made more of this incredible notion that in a car-buying lull a manufacturer has a car that has sold out and demand is still there.

 

[Rob R]

VAT was never intended to be a 'luxury' tax, it simply taxed the value added at each stage of the manufacturing or service life cycle and at its introduction there was a single flat rate.

Purchase tax which it replaced did have a luxury base for the different rates.

Things change over time of course, but right from the start VAT covered a wide range of goods and services and had nothing to do with 'luxury'.

Yes, the UK had to introduce VAT when it joined the EU, which it did by "converting" Purchase Tax into VAT, still leaving some elements of the selectivity of Purchase Tax, including the idea it should not apply to staples like food. Hence the Greggs heated sausage roll tax case, a hot sausage roll being taxable (restaurant food being a "luxury"), but a cooked sausage roll that just happened to be cooling in a cabinet not being taxable.
I believe the compromises with the EU from VAT introduction required the UK to not extend Imperial Taxation (the tax on petrol and cigarettes etc), but if the UK leaves the EU it could introduce Imperial Taxation on EV electrons through smart meters. Probably will, in time, but not until their revenues are plummeting through mass EV adoption. The advantage for the Treasury is that Imperial Duty is so many pence per kW. It is not price related at all.

 

[MrBadger]

Hence the reason why transport industry is seriously looking at road use and time pricing - I got the impression of when not if (ex transport insider on outside of this)

 

[banned-66611]

Not going to sign this.

Tesla should deliver on their promise of an affordable Model 3. EVs are supposed to be getting cheaper and mass market. Just because they can't quite manage it doesn't mean that they should be given extra support to get there.

Plenty of other long range EVs are in well under the luxury tax limit. Maybe you should start a petition calling on Tesla to deliver what they promised.

 

[Singer3000]

It’s idiotic to be simultaneously taxing and subsidising something. There’s a £3k grant because EVs give social benefits. So far so good. But then there’s a 10% import tariff on Teslas, 20% VAT and then this £320 x 5 year “luxury tax” (charged on years 2-6).

Someone above said only “rich bastards” buy Model 3s so this tax should still be charged. Well guess what. By year 4 the average “rich bastard” like him will have sold his vehicle to a decidedly not rich bastard, who will continue to pay this tax and for whom total cost of ownership will determine whether to switch to EV or keep ruining everyone’s lungs with German diesel.

It’s such a mind bogglingly stupid policy. I already wrote to the (presumably) departing Environment Sec about this, I’ll be doing the same to whoever succeeds him. What’s needed is a full scale diesel scrappage scheme to accelerate the EV transition, not an admin heavy tax structure of upfront grant followed by annual tax.

 

[Yev000]

I recon tax on electricity to charge electric will never happen. Too easy to circumvent. Like getting solar, or charging with UMC and a commando socket. Or using a "Dumb" charger.

Tax for road usage is also a no go because it will hit trade, everything will go up in price with the tax.

they will probably milk fuel for a long while yet, 5+ years. EV adoption is less than 1% right now and if it reaches 10% by 2025 I'll be surprised. Then there is all the vans and lorries that wont be replaced for ages. There just isn't enough battery production capacity.

This luxury car tax is just an unfortunate accident for EVs due to higher battery cost.