Luxury Car Tax fails but reference to Henry Review stands

Despite the failure of the Luxury Car Tax in the Senate, the Greens today urged the Government to move ahead with investigating a new tax incentive scheme to make green cars cheaper for all Australians.

In addition to exemptions for fuel efficient cars that Australian Greens climate change spokesperson, Senator Christine Milne, had negotiated with the Government, the Treasurer agreed to refer to the Henry Taxation Review consideration of the Greens' proposal to phase out the Luxury Car Tax and replace it with a tax based on vehicle fuel inefficiency. This commitment was made in the Second Reading debate yesterday and the Government must stand by it.

Senator Milne said "Taxing cars by their fuel consumption and greenhouse emissions is a great idea whose time has come. I have every hope that the Henry Tax Review will see the tremendous benefits in this approach when the Government asks it to consider it.

"The Government and Opposition have for too long been prepared to subsidise local manufacturers to keep producing gas guzzlers, and to prop up that short-sighted approach further through procurement policies. It's time we got serious about fuel efficiency by tying all subsidies to the industry to stringent fuel efficiency standards, as well as by supporting fuel efficient vehicles through the tax system and procurement policies.

"In a world of climate change and peak oil, Australian car manufacturers cannot be globally or domestically competitive into the future while manufacturing gas guzzlers.

"China has recently introduced a sales tax of 40% on inefficient cars to build China's global dominance in the market, as well as to achieve emissions reductions and reduce their dependence on imported oil. Australia would be foolish to be left behind in the race to fuel efficiency in the face of peak oil.

"We should be dealing with equity through the income tax system and not through ad hoc measures such as taxing luxury cars. The Greens were the only party to oppose cuts to the highest income tax rate."

Contact: Tim Hollo on  0437 587 562