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Thursday, 24 May 2001
Page: 27031

Mr SOMLYAY (2:37 PM) —My question is to the Treasurer. Would the Treasurer advise the House of the effect of measures in Tuesday's budget that have enabled businesses to claim full input tax credits on the purchase of motor vehicles, and can the Treasurer inform the House of any reaction to this measure?

Mr COSTELLO (Treasurer) —I thank the honourable member for his question. As the House would be aware, in the budget two nights ago this government brought forward full input tax credits on all motor vehicles for business. That was the equivalent of a tax cut for business of over $600 million, I believe. That means that businesses in this country can now buy fleet cars and trucks tax free. Let us compare that to the system under the Australian Labor Party.

Mr McGauran —Yes, let's.

Mr COSTELLO —Under the Australian Labor Party motor vehicles were taxed at 22 per cent.

Mr McGauran —Oh! Goodness!

Mr SPEAKER —I warn the Minister for the Arts and the Centenary of Federation!

Mr COSTELLO —Mr Speaker, he is probably astounded, as I am, at the 22 per cent wholesale sales tax which cars carried under the Labor Party's tax regime. If you were a business buyer, you paid a 22 per cent wholesale sales tax. When this government introduced 10 per cent GST that led to a fall in the cost of vehicles by around seven per cent. That is when you could not claim back the GST, but from 1 July 2001 you can claim back the full GST, meaning that businesses will get a further reduction of around nine per cent in the cost of their vehicles.

One of the great things about tax reform is that by spreading the taxation burden we have taken the weight off Australia's manufacturing industry. One of the biggest beneficiaries of tax reform have been the manufacturing industries of Australia. If it is Labor Party policy to roll back the GST and reintroduce wholesale sales tax, the people that would suffer the biggest detriment under such a tax policy would be the manufacturers of Australia. The Federal Chamber of Automotive Industries said of the budget announcement:

We are delighted with the announcement. It is a big boost to all business, big and small.

Small businesses that buy cars and vans will all get the effect of this tax reduction. The Motor Trades Association said:

This measure will provide a major boost to business, the Australian automotive industry and the motor trades, and to local supplier manufacture.

But probably the best words of praise for the decision in the budget on Tuesday night came from the Victorian Treasurer, Mr John Brumby—

Mr Anderson —Really?

Mr COSTELLO —The Victorian Labor Treasurer, Mr John Brumby, said:

If you are buying a new car, obviously the benefit of the GST credit will be of value to you. And from Victoria's point of view, given that we have got Toyota and GM and Ford, if we sell more cars, that means more investment, more jobs. We are happy with that.

`More investment, more jobs'—the benefits of tax reform being lauded by the state Labor Party Treasurer in Victoria. The only political party that I am aware of that stood against tax reform was the federal Labor Party. And today we find out that all along it has had another secret tax plan as to how it is to pay for its roll-back and its new spending. We say, and the people of Australia say, `Come clean.' Tell the people of Australia what your new taxes are; tell them by how much you are going to put them up so that at the next election they can cast an informed vote between the increases in tax from the Labor Party and the good economic management from the coalition.