The Federal Government introduced the luxury car tax partly to protect the Australian vehicle manufacturing industry, which has since gone into further decline.

Amid calls for the tax to be abolished, or at least redesigned, a state parliamentary committee inquiry has heard evidence it is undermining the car restoration sector in Australia.

Wolf Grodd, owner of Moorooka restoration business ‘Sleeping Beauties’, pointed to clients who had wanted to import around $11 million worth of classic cars, only for the added $3.5 million tax burden to make it unfeasible.

Grodd said other countries had a booming car restoration sector and, with overseas enthusiasts continuing to buy cars from Australia, where people by contrast now look for cheap imports, “Australia is slowly being drained of its motoring heritage”.

The committee acknowledged the tax “not only impacts on the owners of historic vehicles, it also reduces the work available to restorers on these vehicles and impacts on a range of other industries”.

In response, Bailey has agreed to write to his federal counterpart, Deputy Prime Minister Michael McCormack.

“The Minister will highlight that submissions to the inquiry suggested that the LCT may act as a disincentive for the importation of vehicles, such as historic vehicles in need of significant restoration and that the original reason for the introduction of the LCT, to protect the Australian car industry, no longer applies,” the government said in a statement.

“On that basis, the Minister will ask for a review by the Commonwealth of that aspect of the LCT scheme.”

The LCT is applied to vehicles valued at more than $68,740, calculated at 33 per cent on every dollar above that threshold, which is lifted to $77,565 for fuel efficient models.