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Friday, 1 June 1984
Page: 2377

Senator MAGUIRE —My question is directed to Senator Button in his capacity as Minister for Industry and Commerce. I refer to information provided this week showing that Budget sales tax collections from motor vehicle sales more than doubled under the Fraser Government in the three years to 1982-83 and that motor vehicles contributed at least one-fifth of all sales tax revenue in the Budget, and possibly one-third. Does the Minister consider that, in addition to the effective car industry plans involving tariffs and quotas, general financial measures, such as the level of sales tax, can have an impact on the level of activity in the car industry? Does the Minister take the view that the recent large sales tax rises have held back the car industry at a time of difficult economic circumstances?

Senator BUTTON —The honourable senator is right in saying that sales tax on motor vehicles was increased in the 1981 and 1982 Budgets from 15 per cent to 20 per cent in two progressive steps. Sales tax, as I have indicated, is currently levied on passenger motor vehicles at about 20 per cent. I make the point that historically that is not a high rate; it has been 40 per cent in the past. The rise in receipts in recent years is probably due to the rise in passenger motor vehicle prices and the tax base. It is not surprising, I suppose, that sales tax from passenger motor vehicles is a big proportion of the total receipts of sales tax, as passenger motor vehicles are big capital items among the relatively few goods purchased by consumers which are subject to sales tax.

I recognise that it is a significant impost on the passenger motor vehicle industry, but I would also make the point that if one looks at the fluctuations in demand for passenger motor vehicles, and indeed the registrations of passenger motor vehicles, over the past two years one will see enormous fluctuations which are more related, I think, to the general economic situation than to the existence or otherwise of sales tax. For example, 1982 and 1983 were very bad years for the industry; 1984 has shown considerable improvement with probably the highest registrations for some years now.