NEW SYSTEM FOR MOTOR VEHICLE DUTY

Premier Peter Beattie and Treasurer Anna Bligh announced today that a new environmentally friendly rating system for motor vehicle transfer duty would be included in next week’s State Budget.

Mr Beattie said the new scheme provided motorists with an incentive to play their part in helping tackle global warming.

“We think we have come up with a new system of motor vehicle duty that will encourage smaller cylinder purchasing for new cars,” Mr Beattie said.

“Meaningful efforts to combat global warming must involve incentives for low emitting activities.

“Under the existing motor vehicle transfer scheme there is a levy of 2% on all cars.

“The new scheme for motor vehicle transfer duty will encourage smaller cylinder cars through a gradual levy based on the number of cylinders.

“To encourage the uptake of Hybrid cars duty on them will remain at 2%.

“For a four cylinder car the levy will increase to 3%. For a $22,000 Toyota Corolla this will mean an increase in duty from $440 to $660.

“For a six cylinder car the levy will increase to 3.5%. For a $38,000 Holden Commodore this will mean an increase in duty from $760 to $1,330.

“For an eight cylinder or more car the levy will increase to 4%.

“We believe these changes are fair and sensible.

“The revenue currently collected in Queensland from motor vehicle duty is only 64% of the national average. No other state has a duty related to cylinders, but even with these changes our rates will still be below or comparable to most mainland states (see attached table).

The commencement date for the new rates will be 1 January 2008.

Ms Bligh said the change would raise approximately $200 million over a full year of operation and that this was the first increase in this duty in over 25 years.

“Queensland has underspent in some social services areas for decades and we have learnt the hard way what this underspending in services causes. You pay a heavy price when services are asked to do too much with too little, for too long.

“We need to increase our investment in services so our social infrastructure more closely matches what is available nationally. We can only achieve that if we inject revenue into our services.

"Queensland has had competitive taxes for decades and this will continue. However, the community is quite rightly demanding higher quality services and these must be paid for.

“For example our mental health spending is below national levels, at around 80%. Even with the funding injection announced today our funding per capita is unlikely to reach national levels.

“We have been injecting spending into this area to build its capacity and our aim is to match what is available nationally.

"Clearly, although our Government has increased service spending to record levels in areas like Health, Child Safety and Education, there is more that needs to be done in other areas.

“Our Government wants to offer Queenslanders the highest level of social services while keeping our taxes competitive.

“Even with the changes announced today Queensland will retain its competitive tax status with per capita tax estimated at $2,226 in 2007-08 compared to an average of $2,357 for the other states.”

Ms Bligh said while Queensland’s rate of population growth brought many economic benefits it also put enormous pressure on services and infrastructure.

“We must remember that State Governments are relied upon to provide many of the human services that make a real difference to peoples lives like police, health and education. However the Commonwealth raises most of the tax, and their tax share of GDP is at record highs,” she said.

“At the same time, despite the Federal Government’s increasing tax haul, funding of the States is at the lowest level in at least three decades as a percentage of GDP.

“We are being asked to do more with less and the Beattie Government will not let our services be short changed into the future.”

30 May, 2007

Further inquiries: Premiers Office (07) 3224 4500
Deputy Premier’s Office (07) 3224 4379