Gavin Marshall (Victoria, Australian Labor Party) Share this | Hansard source

I will start by commending Senator Bishop for a very valuable contribution to this debate. The Tax Laws Amendment (Luxury Car Tax) Bill 2008 increases the luxury car tax rate from 25 per cent to 33 per cent to apply on and from 1 July 2008. Let me be clear from the outset that this bill is about Australians contributing their fair share. I have heard some members of the opposition flippantly refer to this measure as simply a grab for tax. Maybe they ought to consider what has happened in tax since the Labor government have been elected. We are delivering, in our first nine months and with our very first budget, $46.7 billion in tax cuts over the next four years, which will mean more money in the budgets of working families. Let me be specific as to what that $46.7 billion in tax cuts over the next four years means to working families. A family on a single income of $40,000 will be $20.19 per week better off, or $1,050 over the course of a year. A family on a single income of $80,000 will be $21.15 a week better off, or $1,100 a year, and families with a combined income of $100,000 where the primary earner’s income is $60,000 will be $31.73 a week better off, or $1,650 a year. The government have now delivered massive tax cuts and will continue to deliver significant tax cuts to working Australians over the course of the forward estimates.

With this bill we are at the same time plugging the gaps in the system and reducing the overall tax burden on working families. This increase was announced in the 2008-09 budget as part of the government’s package of measures to enhance fairness in the tax system. The government believe that Australians who can afford luxury vehicles have the capacity to contribute to revenue at a higher rate than other car buyers. Let us appreciate from the outset that the budget the Labor Party brought down last May was a tough budget. It had to be a tough budget because we were left with a 16-year high inflation rate. It had to be a tough budget to address the legacy left to us by the Howard government. Some hard decisions had to be made, and we would have preferred not to have had to make some of the decisions, but at the required time we delivered significant personal income tax to working families and we are making some adjustments to the taxation rates in other areas. These are necessary to deliver the significant surplus that we have to address inflation, to keep downward pressure on inflation, and, consequently, downward pressure on interest rates. These are responsible measures.

The measure is expected to raise $555 million in additional revenue over the forward estimates. Since 1979, successive Australian governments have imposed an additional tax on luxury vehicles. The luxury car tax was introduced on 1 July 2000 when the GST was introduced and the wholesale sales tax was abolished. Luxury car tax applies to cars whose price, including the GST, exceeds the luxury car tax threshold. This is currently $57,123. Certain types of cars are exempt from the tax. This includes most commercial vehicles, most second-hand cars, motor homes, campervans and prescribed emergency vehicles. We are not changing the arrangements to those categories of cars. A car specifically fitted out for transporting a person with a disability who uses a wheelchair is excluded from the definition of a ‘luxury car’ provided the car is not also GST free under the GST laws. It is estimated that around 10 per cent, or around 100,000, of all new car sales made in Australia in 2007 were subject to luxury car tax. The tax is applied to both imported vehicles and domestically manufactured cars. Of the top 20 selling cars in 2007, which cover more than 50 per cent of the car market, fewer than four per cent are subject to the luxury car tax. Of the five Toyota Tarago models, only one attracts the luxury car tax. Of the three largest selling people-mover brands, this is the only model that will be impacted by the tax increase. In real terms, the price increase for the vehicle is just over one per cent.

Let me make the point again, because the opposition seems to be unable to understand the point of the bill: this bill is about all Australians contributing their fair share. This is about the government recognising the need to reduce the overall tax burden on working families. That is why the opposition are opposed to this bill. They do not want to make this contribution. We recognise that there are some opposite who do not want to pay more for their luxury cars. While those opposite do not want to pay more for their luxury vehicles, the legacy they have created from over a decade of financial mismanagement is hurting working Australian families. When you combine this with active targeting of working Australians through Work Choices, Australians have had it tough. Not only are those opposite unwilling to pay more for their luxury vehicles; they do not seem to notice that the very same working families that suffered dramatic increases in the cost of living voted them out. They are still trying to govern from opposition. In doing so they are vandalising the budget: cherry picking pieces of legislation that they choose to support or oppose based on crass short-term populism geared towards grabbing headlines. This is nothing more than political opportunism, and it is political opportunism that we have experienced consistently since the conservatives have been in opposition. They left this government with a legacy of the highest inflation in 16 years. It is us who have had to make the hard decisions about putting pressure on inflation and therefore downward pressure on interest rates in the interests of all Australians. It leaves you wondering what position they are going to take next. Is the opposition to this legislation coming from Brendan Nelson’s office or that of Malcolm Turnbull? We will never know.