Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Hansard source

Last night when I was speaking on the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008, I drew attention to the fact that it was a piece of legislation that endeavoured to correct some of the flaws in the luxury car tax legislation. This is a fatally flawed piece of legislation. The changes that are being made in the bill, while they are an improvement, go nowhere towards fixing what is a ridiculous tax that has been imposed in an incompetent way. The flaws in this tax, which is badly developed, have arisen because of the bungled process. Deals done in the Senate at the last minute to get the legislation through were not properly considered and when the regulations came out it turned out that the concessions proposed to be granted were in fact largely ineffective.

If we go back a little into its history, this particular tax was a part of the $19 billion tax grab that was included in the Rudd Labor government’s first budget. This drove them into a situation where they became the biggest taxing government in Australian history. In spite of inheriting a $20 billion surplus and $60 billion in the Future Fund, the Rudd Labor government could not even develop a satisfactory budget without imposing another $19 billion worth of new taxes. In spite of $19 billion in new taxes, yesterday we heard the government admit that after only 12 months in office the budget is going to plummet into deficit. It was deficit day yesterday when Labor admitted that, in spite of the $20 billion they inherited in surplus and the $60 billion in the Future Fund, they cannot even balance their first budget. Their first budget is going to go into deficit. That is obviously a demonstration of Labor’s incompetence when it comes to financial management.

Whilst they cannot manage the budget in a macroeconomic sense, this legislation is proof positive that they also cannot manage it in a microeconomic sense. The detail associated with the luxury car tax was flawed. The luxury car tax set in place an additional complication in our taxation regime. As a result of the introduction of the luxury car tax, there will now be a total of six separate rates at which a car can be taxed. It brings back memories of the horrors of the tax system that existed under Labor with the wholesale sales tax rates, which they defended to the death, with multiple complexities of rates. Following this legislation and these amendments, some cars will be able to be taxed at zero per cent, other cars will be taxed at 25 per cent and other cars will be taxed at 33 per cent. All cars will attract a 10 per cent GST, but for some people that GST will be refunded. So in reality there will be six separate rates of car tax.

If you think that it is only luxury cars that are taxed at the top end, you need to think about the poor people who have large families and need a vehicle that can move a large family. Some of them are going to be paying 33 per cent in tax. In fact, including the 10 per cent GST, 43 per cent on a top-of-the-range Tarago will go to the government in tax. That is 43 per cent tax for a large family with all the extra costs that they have in ensuring that their family is able to meet their daily needs. If they need a large vehicle to carry their family around, Labor will tax them 43 per cent on top of the cost. But if you buy a Mercedes, Jaguar, Audi or BMW under Labor, a significant proportion of those imported luxury cars will not have a 43 per cent tax or a 33 per cent tax; they will have zero tax. There will be no tax at all on a Mercedes but, if you buy a people mover for your family, you will be up for 43 per cent. The reality is that this demonstrates something about Labor when it comes to fairness.

This was a poorly conceived tax and the concessions made to the Greens made it a whole lot worse. This legislation will provide for refunds and/or exemptions for those parties promised by Labor when they introduced the tax, namely primary producers who purchase four-wheel drives, eligible tourism operators and those who ordered a luxury car before the budget. Specifically, it will clarify and correct another one of the incredible bungles in the original legislation. If you purchased a car or a vehicle that was subject to the luxury car tax through a finance company or a lease plan, you do not qualify for the exemption. That in fact affected 60 per cent of the people who were purported to be eligible for this concession—farmers and tourism operators. Sixty per cent of those vehicles are purchased through leasing or finance arrangements. The bungle in the original legislation meant that most of the people who were supposed to get the concession did not in fact get it.

There are many other anomalies in relation to the concession that is granted on four-wheel drives. These are anomalies that are not being corrected by Labor in this legislation. Under the arrangements, a farmer who owns the land can get the concession on the luxury car tax for his four-wheel drive vehicle. But if he is a shearing or harvesting contractor working on the same farm he cannot get the concession. The concession is not available to those people, even though they may be working right alongside the farmer with an identical vehicle in an identical place.

The doctor who needs to visit his country patients on dusty roads or on wet nights is not eligible for the concession, even though he may live in a remote country town. But we desperately need to get doctors and other professionals to work in regional Australia. There are one or two members sitting on the government benches at the moment who represent some regional towns. They also represent some of the towns where it is very difficult to get doctors and other professionals to work. Why are you flogging these people with a 43 per cent tax on their vehicle while allowing certain other people who live in Toorak or in the luxury suburbs in Brisbane to get their vehicle while paying no tax at all? If there were any Labor backbenchers who cared about regional Australia and were prepared to stand up for their communities, they would be outraged that the professionals in their country towns are flogged by a tax that people in the cities do not pay. Where is the justice in this? How has Labor managed to think through this sort of nonsense?

Under the arrangements that were put in place, a farmer who was leasing his LandCruiser instead of buying it would also have to pay the tax. That is being corrected by this legislation and that is a welcome move. In addition, we have issues associated with cars that were purchased before the budget but not delivered until after 1 July. This legislation will ensure that the tax increase will not apply to them. This will also confirm that eligible refunds under this provision will be paid directly to the people who are entitled to receive them.

There are many other anomalies in this legislation. For instance, if a person buys a BMW 3 Series, they will pay no tax at all. If they buy a Holden Commodore, they will be slugged with the full 33 per cent luxury car tax. If they buy a Jaguar X-Type, which is totally imported, the luxury car tax will not apply. But if they buy a top end Ford Falcon there will be $1,000 worth of extra tax.

This government have waxed lyrical about their new $6 billion car subsidy program. This is a $6 billion plan to try and encourage the Australian car industry to manufacture new models and be competitive. I am supportive of the Australian car industry. I wish it were more economically competitive and better focused. I wish that the government would adopt the same attitude to other Australian industries that they have to the car industry. When they inquire into future arrangements, they pick their mates to organise the outcome that they want rather than trust the Productivity Commission. The standards that this government have adopted in relation to the car industry are totally different from what they apply to so many other industries in Australia.

But in one area they are consistent: they are consistently inconsistent. Why are they putting a $6 billion subsidy into the Australian car industry and yet taxing Australian luxury cars but allowing imported Jaguars and Mercedes and Audis and BMWs to be imported tax free? If you buy an up-market Holden or Falcon you pay up to 43 per cent in tax; if you buy a Mercedes or a Jaguar you pay zero tax—you do not even pay the standard luxury car tax rate of 25 per cent; you pay nothing at all. That means the government are artificially subsidising the import of a range of foreign produced cars that are built by foreign workers. They are giving those people a subsidy, yet on the other hand Australian workers are producing cars that are taxed at a rate of 43 per cent.

Is it any wonder that the government need to give them a $6 billion subsidy when they are flogging them with a 43 per cent tax at the other end? This government is so inconsistent and this policy is so poorly thought through that this is the kind of rubbish that is being delivered. That is what results from the kinds of backroom deals that allowed this legislation to pass in the first place.

A large Australian-built Holden attracts the full tax, but if you buy Jaguars, Mercedes, Audis, BMWs et cetera—the cars that you are more likely to see double parked at Double Bay—you get those tax free; no tax at all; zero.

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