Nick Xenophon (SA, Independent) Share this | Hansard source

My position in this second reading debate is that I will support the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills but I will reserve my position in respect to the third reading. The Australian automotive manufacturing industry is a major part of the national economy, with exports growing to just under $5 billion in 2007. Last year over one million vehicles were sold in Australia with 19.1 per cent of the vehicles being produced locally. In my home state of South Australia, General Motors, GMH, is a significant contributor to the South Australian economy through not only revenue from vehicle sales but also employment for the communities around Elizabeth in Adelaide’s northern urban fringe. Consequently, I am keen to support the ongoing viability of the South Australian car industry by measures that might increase the sales of locally produced vehicles.

I note from the report of the Senate Standing Committee on Economics that, in 2007, the luxury car tax applied to 12 per cent of vehicles compared to 4.5 per cent of like vehicles in 1986. That probably reflects the fact that the tax has not been indexed in that time. I also note the concerns of the coalition in relation to this tax and would like to address some of those concerns. I had the benefit of further discussions with the government today in relation to this legislation and I raised my concerns. My first concern is the issue of the cut-off date and when it will apply. As I understand the bill in its current form, if there is a contract entered into on or before 7.30 pm on 13 May and the vehicle is not delivered until after 1 July, that vehicle will be caught by this proposed tax. I have serious concerns about the fairness of that. It is my view that if a bona fide contract was entered into in good faith prior to this budget announcement being made then it would be fundamentally unfair for an additional tax to be imposed when at the time you entered into that contract you had no knowledge that a new tax was going to be imposed. That is an initial concern that I raised with the government.

The second issue I raised relates to the issue of indexation. Currently the threshold for the luxury car tax is indexed according to the CPIMV, which is contentious. I think that was acknowledged in the Senate inquiry report. It involves the use of quality adjustment explained by the Australian Bureau of Statistics as:

Whenever a specification change is made to a vehicle that affects its motoring performance, economy, comfort level, safety or durability … an adjustment is made to the car’s reported price to allow for that portion of the price change that can be attributed to the quality change.

My concern in relation to that is that it does not reflect the actual prices paid by consumers, and I have raised with the government the whole issue of its being indexed according to the CPI, not according to the CPIMV as defined by the Australian Bureau of Statistics. I understand that the government will provide me with details of what the modelling shows the projected costs of that will be if the CPI—as distinct from the CPIMV—is applied prospectively or applied from 1 July of this year. When I receive that information I will be more than happy to share it with my colleagues.

The third issue that I raised—and it is something that Senator Milne has raised publicly—is the issue of low-emission vehicles. It is my view that if we are to set an example on reducing greenhouse gases and tackling climate change then placing an additional tax on low-emission, fuel-efficient vehicles sends a poor signal. That is something that I have raised with the government, and I understand it is also something that Senator Milne has raised and discussed with the government in some detail. We already have a luxury car tax and it is the question of increasing the rate by some eight per cent that is in contention. I do not think that those who oppose the tax are suggesting that we remove the luxury car tax; it is a question of the rate. It is important that we send some price signals about those vehicles that are ultra fuel-efficient—whether they be hybrid or non-hybrid and simply particularly fuel efficient—that will be an encouragement for the purchasers of those types of vehicles relative to, say, the Hummers. And I think that is something—