John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Hansard source

I move:

That the requested amendments be made.

The Senate last night passed the Tax Laws Amendment (Luxury Car Tax) Bill 2008 with amendments, and the government supported those amendments. The government acknowledges the cooperation of the Greens, Senator Xenophon and Senator Fielding on this important budget measure. The government amendments were made following agreement between the government and the Greens. The amendments establish a new threshold of $75,000 for fuel-efficient luxury cars in the luxury car tax law—that is, fuel-efficient vehicles will pay no luxury car tax up to $75,000. The vehicles eligible for the higher threshold will be those with a fuel consumption not exceeding seven litres per 100 kilometres. The fuel-efficient car limit will be indexed in the same way as the existing luxury car tax threshold. The threshold increase will reduce the amount of luxury car tax payable on these fuel-efficient vehicles. For cars that are currently on the market, in most cases the effect will be to reduce the luxury car tax payable to zero. The fuel-efficient car limit will act over time as an incentive to car manufacturers and importers to get very fuel-efficient cars into the Australian market.

Senator Fielding raised his concerns about the impact on farmers and tourism operators with the government. The government supported Senator Fielding’s amendments to provide a refund of the increase in the luxury car tax rate to eligible primary producers and tourism operators. The government is satisfied that the amendments will not impose undue burden on business and have protections in place to reduce the possibility of abuse.

Senator Xenophon raised his concerns about the indexation of the threshold and the application of the luxury car tax measure to car purchasers who entered into contracts before the budget announcement. The government supported Senator Xenophon’s amendments. The amendments changed the method of indexing the luxury car tax threshold, currently $57,180, in line with CPI from 1 July 2012 unless the parliament agrees to an alternative indexation method. The threshold is currently indexed by the motor vehicle component of the CPI—that is, the CPIMV. The amendments also retain the current 25 per cent rate where buyers entered into contracts to purchase cars before the budget for delivery after 1 July.

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