Luxury Car Tax

Luxury car tax bill passes Senate


* September 24, 2008 - 8:14AM


The federal government's luxury car tax increase finally passed parliament's upper house yesterday night after being heavily amended by cross bench senators.

The government's four bills seek to lift the luxury car tax, which applies to cars worth more than $57,180, from 25% to 33%.

The bills were defeated in the Senate earlier this month after Family First Senator Steve Fielding sided with the coalition to vote it down.

However, the government resurrected the legislation after striking a deal with Senator Fielding to exempt primary producers and tourist operators from the increase.

Senator Fielding's amendment was approved tonight, against the wishes of the coalition.

A Greens amendment to exempt fuel efficient cars from the tax was also passed.

Under the Greens amendment, the tax would no longer apply to cars valued up to $75,000 which use no more than seven litres of fuel per 100 kilometres.

Twenty five imported car models - including the Audi A4, BMW 3 series and Jaguar X-type - would be exempted from the tax altogether as a result of the change.

Coalition front bencher Eric Abetz said only about 1,500 of the one million cars sold in Australia each year would be affected by that change.

"Nobody could argue that this is going to have a serious impact on climate change,'' Senator Abetz said. "Nothing but window-dressing.''

The Senate also agreed to Senator Xenophon's request to apply a sunset clause to the tax's indexation to the controversial consumer price index for motor vehicles (CPIMV).

It also approved Senator Xenophon's request to ensure the increase would not apply to people who entered into contracts before the night of the federal budget in May, when the government announced its plan.

But the Senate rejected an opposition proposal to have the tax increase applied only to vehicles worth more than $90,000.

The deputy leader of the government in the Senate, Stephen Conroy, attacked that proposal.

"This is just another part of the raid on the budget surplus,'' he said.

Three of the four bills passed the Senate unchanged. The amended bill will now return to the lower house where the government will approve the cross bench changes.

Government Senate leader Chris Evans said the legislation had passed with its major components intact.

"We think it's a really useful measure, it provides revenue to the government, revenue that will assist us in dealing with really difficult economic times,'' he told the ABC.

Senator Evans said he hoped the opposition would abandon its stalling tactics and take a more constructive approach to the government's other budget bills.