James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Hansard source

The luxury car tax was introduced as part of the GST reform package in 2000. Prior to the introduction of the GST, luxury cars had been subject to a wholesale sales tax of 45 per cent. The purpose of the luxury car tax was to ensure that, when the 10 per cent GST was introduced, the price of luxury cars did not fall disproportionately more than the price of standard vehicles. There is no connection between the luxury car tax and protection of domestic car production. The luxury car tax applies to all cars purchased in Australia above the relevant thresholds, regardless of the place of manufacture.