Living in Victoria with a luxury car? How much damage has it done to you lately?

This article will discuss how much a luxury car tax costs in Victoria.

For all the Victoria Police Service official car drivers or police officers out there, welcome to the real world. The 6% luxury car tax is in full effect.

Your job has just changed. If you have been treating your fancy car like your mistress you may be in trouble.

So how much is the luxury car tax?

According to a Victoria Police press release the new luxury car tax rate is 6% per year. This is in addition to any other stamp duty you might be paying in other states.

Victoria police are exempt from the luxury tax on a “very limited number of cases”.

I had to know more about this so I decided to try to determine how many luxury cars the Victoria Police Service (VPS) had per officer. We are talking serious numbers here.

I know the VPS cars start at a whopping $200,000, and the average VPS officer makes $101,000 a year. I am estimating their profit margins are less than 4% per year if the officer decides to only use one luxury car.

The high cost of maintaining, taxes and insurance costs are a lot cheaper and that is assuming a luxury car is a one-year-a-year kind of deal.

How do we calculate the total amount of luxury car tax for all VPS officers?

Here is how I arrived at the total amount of luxury car tax. The police estimate that the average car costs $222,000.

If each officer is able to claim one car as a spare that is $8,000 in lost income.

That leaves $16,000 left over. I’m going to assume all officers chose a $200,000 luxury car. That means all VPS officers make $80,000 annually and pay the 6% luxury car tax for a total annual profit of $8,000.

If they chose to drive an SUV or a BMW or a Porsche that profit margin would be lower but we are still talking about a nice profit.

If the police bought 20 luxury cars annually each with a $12,000 profit margin it would mean they would have enough to put a $35,000 budget in each car for things like body work and repairs, fuel, repairs, parking and labor. That would amount to over $20 million in profit.

They could take the money and pay for actual police service and still have enough left over to buy 2 luxury cars. I have never seen the police buy a $35,000 luxury car so I’m going to assume that is what they did.

The total profit would be $34,000. That’s around 5% profit margin.

Based on the salary for the average Victoria Police officer and $100,000 vehicle the Victoria Police Service would have an average $340,000 annual budget.

Each car in that budget could have a $15,000 luxury car tax. That leaves a $300,000 profit margin.

Who is using a luxury car as their primary car?

I wanted to see what kind of amount of luxury car tax the Victoria Police made per year, over time, for all the VPS drivers. After looking up official police officers the results were surprising.

The city of Melbourne apparently pays for the police services and most of the luxury cars. The police tell me they use these cars because the police cars have to be bullet proof and the security and comfort of their drivers should be top priority.

Let’s take a look at some current Victoria Police cars and the amount of luxury car tax they paid each year.

Victoria police cars

Let’s start with the McLaren F1. The F1’s asking price is $2,500,000. $1,000,000 goes to Victoria Police and the balance goes into their budget for the extra security and safety of their drivers.

We are talking about a major purchase here. They also pay for their own maintenance and parking fees.

The McLaren F1 was purchased in 2001 with tax dollars and the luxury car tax. That means Victoria Police made $56,000 in luxury car tax from this one vehicle.

The Bugatti Veyron was bought in 2007 for $2,500,000 and cost Victoria Police a $1,000,000 luxury car tax. The Veyron had the most expensive custom paint job ever done in Australia at that time.

They paid almost $2,000,000 to have that painted.

The Veyron is the most expensive vehicle in the VPS fleet and a single Bugatti Veyron costs $3,500,000. Victoria Police made $127,000 in luxury car tax on this car over eight years.

The Audi A8 was purchased in 2010 and was paid for by the public with $7,000,000 in luxury car tax. The average driver of the A8 is a London taxi driver who earns $60,000 per year.

That means the VPS made $328,000 in luxury car tax on this car.

Kinda pricey, right? Well, that's a small price to pay for owning a supercar.

Thus, before making any decisions to purchase a luxury car, do some research about the added costs to see if it's worth it.