Steve Fielding (Victoria, Family First Party) Share this | Hansard source

This debate is not about whether there should be a luxury car tax. There already is a luxury car tax and there is bipartisan support for that tax. The question is whether there should be an increase in the luxury car tax rate and whether some people should be exempt from the increase. This tax increase is a blatant tax grab, but at least the government has made that abundantly clear, unlike with the alcopops tax. It is a tax grab for an extra $555 million over four years by increasing the rate of the luxury car tax from 25 per cent to 33 per cent for cars that cost more than $57,180.

The debate on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills has centred on whether we should be asking people, who can afford expensive cars, to contribute more in tax and whether this tax hike will damage the car market in Australia. However, Family First is concerned about putting taxes up at a time when families are struggling to make ends meet and when the economy appears to be slowing. In my state of Victoria, the car industry is a significant employer but, last month, Ford said it would cut 350 jobs in Melbourne and Geelong. In June, Holden said it would stop making four-cylinder engines in Melbourne. The industry is feeling the pinch.

But the tax is on cars that are worth more than the average income of Australians. The proposed increase in the luxury car tax would see a new $65,000 car have an extra $483 tax bill, which to many may seem fair enough. For those who can afford a Porsche 911 at more than $240,000, the extra tax is $13,660. If you look at the top 10 cars sold in Australia in July—Commodore, Corolla, Falcon, Mazda, Yaris and so on—you would find that none of them fall into the luxury car bracket. They are all good quality cars but with a much lower price tag. So, looking at the direct impact of the tax, I think most Australians would think it is fair enough that those people with the disposable income to buy such expensive cars are asked to pay just a little bit more in tax. But policy is seldom that simple. The difficult part is to work out the indirect effects of the tax and whether this tax, which the government expects will raise an extra $555 million over four years, will have any important unintended consequences.

Family First’s question was: are there community groups that will see this increase as a kick in the guts? Carers and people with a disability are some of the most deserving people in the community and actually need a helping hand. In the act, there is a reference to cars not being defined as luxury if they have the facility for a wheelchair, and that is well and good; however, there are also small businesses that depend on their cars as tools of their trade but their vehicles are not covered by those exemptions. Small tourism operators and farmers are two important groups who will get slugged by this tax increase. The tourism industry is heavily dependent on the seven- and eight-seater diesel Toyota LandCruisers and similar vehicles that are used by tour operators, particularly in rural and regional Australia. While there is a tax exemption for commercial passenger vehicles with nine or more seats, vehicles with seven or eight seats are unfairly captured by this increase.