Greens Senators' additional comments

1.1In 2008, the Australian Greens and Australian Labor negotiated the higher vehicle efficiency threshold as a design element within the luxury car tax in order to send a price signal to consumers choosing between higher and lower emitting vehicles.[1]

1.2That standard was set at 7 litres per 100 kilometres, but given the natural technological improvements and emissions standards in major global car markets that oblige increasingly efficient vehicles, the current standard has been eroded over time and needs re-aligning.

1.3The change proposed in the bill will remove internal combustion vehicles and their hybrids from the more generous threshold and refresh the intent of the original 2008 agreement.

1.4Schedule 2 of the bill will deny deductions on interest payments from Australian Taxation Office (ATO) debts and, as a result, will correct a deeply regressive element of our income tax system whereby the Australian public effectively subsidises high income earners debt repayments to the tax office.

1.5Currently people with incomes over $190 000 that have an ATO debt are able to deduct 45 cents in every dollar paid back on a debt while a worker earning $45000 a year can only receive a 16 cent discount on every dollar of interest paid to the ATO. Someone with a tax debt earning below $18 200 would have to pay the full amount back with no tax deductibility.

1.6The current system is deeply regressive, but is also open to manipulation by financially literate high income earners who can intentionally run up a debt to cover other life costs, knowing the Australian public will pick up almost half of their interest charges.

1.7These two changes make the rest of the bill worth supporting as a matter of urgency, because these are not measures that any Coalition Government, with their affection for higher pollution and economic inequality, would ever pursue.

1.8The Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 should be passed before the 47th Parliament is dissolved.

Senator Nick McKim

Member

Greens Senator for Tasmania

Footnotes

[1]ABC News, Greens to back luxury car tax, 3 September 2008,https://www.abc.net.au/news/2008-09-03/greens-to-back-luxury-car-tax/497618 (accessed 30 January 2025).