Coalition fails to amend luxury car tax

The Senate has rejected an opposition proposal to have the government's planned luxury car tax increase applied only to vehicles worth more than $90,000.

All seven balance of power senators sided with the government to vote down the coalition amendments, 36 to 34.

The government's legislation seeks to lift the luxury car tax, which applies to cars worth more than $57,180, from 25 per cent to 33 per cent.

The coalition on Tuesday sought to amend the government's bills so that only vehicles worth more than $90,000 would be taxed at the increased rate, while cars worth between $57,180 and $90,000 would be taxed at the current rate.

The coalition believed such a change would ensure people with 4WDs and people movers would not be slugged with the increase.

The deputy leader of the government in the Senate, Stephen Conroy, attacked the opposition's proposal.

"This is just another part of the raid on the budget surplus," he said.

"By lifting the tax threshold, they are giving a tax break to Porsche drivers."

But Liberal frontbencher Eric Abetz said the government's plan would hurt country people and could destroy the jobs of Australian car industry workers.

Senator Abetz also said Family First's proposal to exempt farmers and tourist operators from the tax should be extended to other country people, such as veterinarians, Australia Post contractors and stock agents.

Senator Abetz said country women often had to drive their children long distances to school each day.

"It is not just the primary producer's vehicle you have to look at," he said.

He said mothers,in country areas, taking their children 40 or 50 kilometres to school each day, also needed four wheel drive vehicles.