Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

Senator Conroy asks if we ever indexed them. Yes, we had the CPIMV but, unlike Senator Conroy at question time today when he clearly made a mistake and was unable to recognise it because pride gets in the way with those opposite, we are willing to say that we in fact wanted another term in government because all our business had not been finished. There were other matters that we had to address, and clearly the luxury car tax was one of those things that needed to be addressed. It came to our attention because of this tax slug.

Let us just remember this: the motor vehicles that will be affected will now be subject to 10 per cent GST, 25 per cent luxury car tax plus an eight per cent luxury car tax surcharge. Whilst some of those are cumulative, if you just add up the straight percentages you have a 43 per cent tax rate on that part of motor vehicles that are priced above $57,180. The government believes that this is vitally important; yet, is there such a thing as a luxury tax on a private jet, a private yacht or a $200,000 Rolex watch? No. But, on the automotive sector, there will be.

We believe that there needs to be an adjustment. Did we deal with it when we were in government? No, we did not. Should we have? Absolutely. Was the Howard government perfect? No, it was not. But, you see, we are willing to acknowledge some of our shortcomings, unlike the arrogance of Mr Rudd and Mr Swan, now being echoed by Senator Conroy, who believe that they never make mistakes and do not overlook things. The simple fact is that we are willing to acknowledge that we could have done things better. But I will just remind Senator Conroy that the huge legacy of $96 billion of Labor debt was only finally paid off in April 2006. So we needed a lot of revenue streams, even if we did not necessarily like them, to help pay off this great intergenerational injustice that the Hawke-Keating era left for the Howard-Costello era to fix up. After April 2006, we were able to turn our minds to some tax deductions. We did so, and it was nice to see Mr Rudd embrace them and say, ‘Me too,’ during the last election.

Coming back to the point at hand, we do need a more appropriate indexation mechanism for the luxury car tax so that bracket creep does not get us to a situation where—and the evidence on this is undisputed—within a couple of decades 50 per cent of all vehicles sold in Australia will be subject to the luxury car tax.