Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

The amendments to the Tax Laws Amendment (Luxury Car Tax) Bill 2008 increase taxes on certain vehicles. Overall, the bill and these measures offend the very principles that guide Treasury as set out in its report on the tax system released only last month. Those principles are efficiency, equity, simplicity and low administrative and compliance costs. The luxury car tax fails against every one of these principles. It is inefficient, inequitable, complicated and, therefore, costly to administer and to comply with. Of course, another point is that the government did not tell the people of Australia about this tax hike before the election. The bill as amended is an even greater failure against the Treasury principles. It is, as some of my colleagues have described, a dog’s breakfast.

The existing luxury car tax is 25 per cent. Add to that the GST, which was meant to be the consumption tax, of 10 per cent, and the government now wants to add a surcharge of a further eight per cent—a total of 43 per cent on certain vehicles. The coalition opposed the bill in its original form because, with a strong budget surplus and with a slowing economy, these tax increases are not needed and are not justified. Now the amendments make this an even worse piece of legislation, compounding the complexity and unfairness inherent in the original bill.

There are four amendments. We will oppose the amendment relating to fuel efficiency, which was a deal done between the government and the Greens, as it is fundamentally flawed. It allows a small range of vehicles to be exempted from this additional tax of eight per cent. All the vehicles to be exempted are small, European-made sedans. The list of vehicles that will be exempted provided by the government—not upront but in response to a request by the coalition in the Senate—includes: the Alfa Romeo 159 Sportwagon, the BMW 3 Series, the BMW X3, the Jaguar X-Type, the Mercedes-Benz C-Class and others, including the BMW 5 Series. These are all vehicles that are exempted under the Labor government’s new proposal. This is the party of the working classes exempting European sports cars but slugging Australian-made cars, such as the Ford Territory or the Holden Commodore, with an additional so-called luxury car tax. Not one car made in Australia will be exempted under the Labor government’s tax—not one. A family who wants a full-size family vehicle or a four-wheel drive vehicle that costs between $57,180 and $75,000 will be hit with the additional tax, but a Labor Party branch president driving a Jaguar X-Type down Collins Street in Melbourne will be exempt. They will be exempt from the tax but the family needing an Australian-made family car will be hit with the tax.

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