Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Hansard source

The government has worked on the presumption in the past that there was bipartisan support for taxing luxury cars in this country, which of course was the position for 30 years. The present luxury car tax, I remind the Senate, was introduced by the previous government in 2000. What has changed? This is not a tax on ordinary Australians, as Senator Minchin has been suggesting. The tax applies only to vehicles that cost more than $57,123. The tax is payable only on the value of the car that exceeds that threshold. Nine out of 10 cars sold in Australia are totally unaffected by the tax. The luxury car tax has been fixed at 25 per cent for many years. The government proposes to increase the tax to 33 per cent. That is still significantly lower than the 45 per cent rate that applied under the wholesale sales tax regime before 2000. The tax is payable on only the most expensive 10 per cent of cars sold in Australia.

The luxury car tax on the Ford Territory Ghia will increase by some $500 while the tax on the Porsche 911, currently retailing at over $300,000, will increase by around $14,600. None of this stands in the way of motorists looking for a good alternative. There are many choices available under the luxury car tax threshold, including the Honda Civic, for instance, and the Toyota Prius. The government’s proposal is expected to raise an additional $555,000 million over four years. It is part of a responsible integrated budget strategy that delivers a $22 billion surplus. That surplus is essential to our efforts to tackle the inflationary legacy of the Howard-Costello government.