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Tuesday, 24 November 1959

Sir WILFRID KENT HUGHES (Chisholm) . - This bill, which deals with sales tax on motor vehicles, is apparently a very simple measure, but I do not think that it is quite as simple as it appears to be at first glance because there are many complications involved in the alteration. The fifth schedule to the principal act is to be amended by the addition of the following item: -

Motor vehicles that are so constructed as to be capable of being readily converted (whether with or without the addition of seats or other fittings) into sedans, station waggons, estate cars or vehicles similar in design to station waggons or estate cars.

When the bill was introduced there seemed to be only two points at issue. The first was whether under the existing sales tax law certain firms or certain buyers were practising tax evasion, and secondly, whether the loss of revenue which would result if the existing system were allowed to continue was more important than permitting commercial vehicles to be changed into station wagons.

As the honorable member for Melbourne (Mr. Calwell) has pointed out, on 12th November, 1957, the then Treasurer, when replying to a question that was asked by the honorable member for Werriwa (Mr. Whitlam), more or less on notice, with regard to the classification of this kind of vehicle, stated -

Item 1 in the fifth schedule to the Sales Tax Ademptions and Classifications) Act specifically includes station wagons among the classes of passenger-carrying motor vehicles which are subject to tax at the rate of 30 per cent.

Now come the important words -

This classification is based on information to the effect that station wagons generally are designed primarily for the carriage of passengers, are built on a passenger car chassis with a view to providing the comfort of a passenger vehicle, and in some instances are more expensive than a sedan car of comparable power.

It will be seen, therefore, that on 12th November, 1957, station wagons were classified as passenger cars for the reasons that were stated by the then Treasurer. The point at issue which has not been brought out, either by the present Treasurer (Mr. Harold Holt) in introducing the bill, or by the honorable member for Melbourne in opening the debate for the Opposition, is that there are kinds of station wagons which are not built on a passenger vehicle chassis. These station wagons are converted from the ordinary commercial chassis - what we used to know as a 10 or 12 cwt. utility - and they are more expensive than comparable station wagons that are built on an ordinary sedan chassis. Therefore, they are not exactly the same kind of vehicle.

In this day and age we must look at this matter from the point of view of having, first, the ordinary passenger sedan, then the station wagon, which I call the family wagon, which is built on a sedan chassis, then the commercial van and then the real station wagon which has heavier front suspension, a different back axle from the other kind of vehicle, and very much heavier springing on the back axle so that it can carry the 10 or 12 cwt. for which it was designed. This is really a commercial van into which two extra seats can be fitted. But that is an expensive operation. Apparently no distinction has been made between what might be called the family wagon and the station wagon. The family wagon has a better finish. You cannot throw bits of old machinery into the back of it without doing a certain amount of damage. The station wagon which is built from a commercial vehicle can be, and is, used for commercial purposes by small traders, people engaged in building work and by all kinds of people, but particularly, as was mentioned by the honorable member for Melbourne, by primary producers. The small farmers are not able to afford an ordinary passenger sedan and a second vehicle known as a station wagon for general work around the farm. For that reason, quite a number of farmers buy the station wagons because they can be used for taking the children to school or to meet the school bus or, if the family is going for an outing, they can be used as a passenger vehicle. Honorable members should give this bill a good deal of thought because it Will' impose a further tax on primary producers, small businessmen and many working-class people.

In the old days a motor car was considered to be a luxury. In these days, in many instances, it is a necessity. I think it was the honorable member for Melbourne who stated that although a doctor cannot manage his work without the use of a motor car, he has to pay 30 per cent, sales tax because his vehicle is always a sedan. Other people in other professions which require the constant use of a car also are -compelled to pay the 30 per cent, sales tax, because the vehicles that they use are not commercial vehicles. I should like to direct the attention of the Treasurer, or of the Attorney-General (Sir Garfield Barwick) who is at the table but who, apparently, is not much interested either, to fact that there is a very great difference between a passenger sedan and a station, wagon. I am Sure that, if the. Attorney-General were pleading this point in a court, of law, he would be most eloquent and would put the matter much better than I. can. I am sure he would state much better than I can how this, will affect the farmers, and that he would, put their case much more forcibly.

I ask the honorable gentleman to impress on. his colleagues in the Government the difference between the two classes of vehicles affected- by- the bill, and the fact that certain factors- in this measure have not been stated- and considered. This is not a Budget measure. It does not affect the- Budget for. the current financial year and there: is no great cause for hurry in putting it through. I seriously ask the Attorney-General to consult, with- the Treasure! on the- question of holding this bill over for th* reasons which- I have discussed: It is not as simple as- it seems. It will affect a lange, number of people. It will- not affect the Budget for the current financial year. I believe I am- right in stating: that it is. not lust a quest-ion, of our needing the cash. I think the Treasurer said that, at present,, this measure will bring- in £300,000 a year, but that the loss- to- revenue, could rise to £3,000,000- a year if it: is not passed. When we come to- deal with a- loan bill shortly,, we shall talk about stacking away cash and writing- off loan- debts at: the average rate of £3:0CO,000, a year. I do not think that £300,000 a year would make much differ ence- to the Budget. In any event, I do not think that this proposal was mentioned in conjunction with the Budget, although I speak subject to correction on that point.

If the vehicles with which this bill is concerned were under-selling comparable vehicles of other makes because they had the advantage of attracting sales tax at the rate of only 16 J per cent, rather than 30 per cent., perhaps the Government would have an argument to support its proposal. But it costs a certain amount of money to convert a commercial vehicle built on a commercial chassis into a station wagon. Ohe firm produces what I shall call a family car, or family wagon, selling at about £1,250. A comparable commercial vehicle of another make which has been converted into a station wagon sells at about £1,350 - approximately £80 or £100 more - although it has a four-cylinder engine compared with a six-cylinder motor in the family wagon. Nobody will pay £80 or £100 more for a vehicle with a fourcylinder motor unless it meets his special needs. The larger manufacturers, in the words of one of our well-known radio personalities, seem- to- be trying to cop the lot. There may be other firms which, also, are converting sedans into family wagons using sedan chassis. If that is being done, that sort of thing is in a. different category and. should be treated differently.

I do not know how you would classify a vehicle like the Volkswagen Kombi - I have to name it because it is a special vehicle in a category of its own - which can be used as a bus, as a family vehicle on the farm, or as a commercial van. Whether that class of vehicle, also, will be classified as attracting 30 per cent, sales tax and not as a commercial1 vehicle, I do not know. Very, very few people will buy such vehicles purely for use as passenger-carrying machines. Therefore, as I have said, I should like the Government to give this matter consideration. It does not seem to be giving it much- at the moment. From time to time, a different Minister takes charge at the table, and nobody in the Government seems to be interested in the matter. Nevertheless, I shall go on with the case..

Another point which I should like to mention is that, last financial year, the sales tax on motor cars brought in revenue of £.60,000,000- £19,000*000 on, commercial vehicles at 16$ per cent, and £41,000,000 on passenger sedan cars at 30 per cent. I think it has already been pointed out that the sales tax was increased to 30 per cent, in the little Budget in March, 1956. I ask the Government to consider whether the time for the removal of the extra sales tax has arrived. Why should the motorist be charged sales tax at 30 per cent, on an article which, I think every one will admit, is no longer a luxury, but rather very largely a necessity for a great many people to-day? I would far rather have seen the rate of sales tax on passenger vehicles reduced to a level which would have returned £23,000,000 instead of £41,000,000- a reduction of £18,000,000. I think, Mr. Speaker, that this would have been a great deal fairer than the reduction of income tax by 5 per cent. - a reduction which has saved the taxpayers overall £20,000,000 a year. In the meantime, however, this heavy sales tax continues to be imposed on motorists. The people have to buy motor vehicles for both commercial and other purposes. As I have indicated, the motor car to-day is as much a necessity, almost, as is a refrigerator.

I shall summarize my points briefly: We do not need the cash. The amount involved is very small compared with a big budget. There may be some tax evasion going on at present by the production of family wagons on ordinary sedan chassis. On the other hand, I do not see why you should have to pay sales tax at 30 per cent, on a station wagon which is a converted utility of 10 or 12 cwt. capacity and which sells at a higher price because it is converted from a commercial vehicle. I have one of them and it does not concern me now whether the rate of sales tax is altered or not. I purchased this vehicle because I take it down to the family farm and like to be able to throw into it anything I wish. One cannot do that with a Holden family wagon. It is so well finished inside that the interior is damaged if old bits of machinery are thrown into it. In addition, it does not have the heavier springing that is needed for this sort of use. Therefore, as I say, the converted commercial vehicle is a different vehicle.

Apparently, to judge from the Treasurer's second-reading speech, the larger manufac turers have threatened to use the device adopted by some other manufacturers in order to attract the lower rate of tax. As I have suggested, I do not think that anybody has considered the difference between a sedan with the hood extended over where the boot is in the normal car and a vehicle that is really a commercial vehicle built on a commercial chassis. The Treasurer said -

The existing law requires payment of tax at the rate of 30 per cent, in respect of motor cars, designed primarily and principally for the transport of persons, including station wagons, estate cars and vehicles similar in design to station wagons . .

I do not mind if the Government says to somebody like myself, " You are using your vehicle principally as a passenger vehicle if it is registered in the city ". But I think that the position of the primary producer and others should be considered. Some people want a station wagon, as distinct from a family wagon. They want what is, in effect, a commercial vehicle. The Treasurer said, also -

It was found necessary to acknowledge that, at the time of the sale upon which the sales tax liability arises, these " station vans " are not within the categories to which the rate of 30 per cent, applies.

In other words, it was admitted by the taxation authorities that tax at the rate of more than 16$ per cent, should not be charged on these vehicles. I should like to know whether the large manufacturers are going to convert vans of 10 or 12 cwt. capacity into station wagons or whether they will manufacture them, as they have been doing in the past, as family wagons on ordinary sedan chassis.

From this point of view, as I say, I feel that the whole of the bill ought to be looked at again because we do not want to carry on any element of interference. Nobody wants to do that. We do not need the cash. Is it really going to achieve what it is supposed to achieve or will it merely mean that more motorists will pay more cash? If that is so I think it is high time that we reduced the rate of 30 per cent, to 16$ per cent, instead of reducing income tax.

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