Page 3257 - Week 09 - Tuesday, 19 August 2008
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policies. It seems that, in this case, despite the rhetoric about concessions, this is not merely a concession scheme—it involves punitive increases in duty for some new vehicles. In his presentation speech on this bill, the Chief Minister stated:
A duty concession will provide an incentive for the purchase of vehicles with better than average environmental performance. For those vehicles with less than average environmental performance, the rate of duty will increase slightly. The duty rates will not change for vehicles with average environmental performance.
They are the words of the Chief Minister: “will increase slightly”. As Mr Gentleman, I am sure, will know from his friends who are motor vehicle enthusiasts, they will clearly have a different view about what slight increases are when they read the consequences of this bill. This is a revealing statement:
For those vehicles with less than average environmental performance, the rate of duty will increase slightly.
That does not sound like a concession scheme to me. In fact, it is not all that slight. According to the current green vehicle stamp duty scheme, people driving vehicles rated as having below average environmental performance will pay substantially higher stamp duty. For vehicles in this category under $45,000, the rate of duty will increase by 33 per cent. For a $45,000 vehicle, the stamp duty will increase from $1,350 to $1,800, and for vehicles in the category above $45,000, the rate of duty on this portion of the cost will increase by 20 per cent. For a $60,000 vehicle, the stamp duty will increase from $2,100 to $2,700.
Moreover, as I have said, these categories and rates could easily be changed by changing the policy, and that would not require any notification to the legislature. In incentive-based schemes like this, it is important to make sure that we do not end up with any perverse incentives which may not have been anticipated. It does trouble me that we are dramatically increasing the rate on some new cars on the grounds that they do not perform as well environmentally as others, but in doing so we are creating a disincentive for purchase of a new, improved vehicle compared with keeping an older vehicle on the road, at least amongst those who are wedded to particular brands of vehicle which may not have optimum environmental performance. This is one perverse incentive of the scheme that does cause me some concern. However, as I have said, what really troubles me is that the scheme can be changed without any accountability to the legislature, thereby creating a de facto change in ACT tax law.
Mr Smyth made reference to families, particularly those involved in the trades. I went through the lists with my staff, and we have talked to people in the industry. There are many people involved in the trades who purchase vehicles in the D category—that is, two-seater vehicles that are clearly for work purposes—who are going to cop a slug from this legislation. Frankly, there are many families who are going to be hit as a consequence of this measure.
I emphasise that I am happy to see concessions. My wife recently bought what I am sure will qualify as a low-emission vehicle, and I think that is great if people can do it. But there are people, because of all sorts of circumstances, who are not going to be able to enter the market for those smaller vehicles. I am particularly concerned that
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