Plans for the new legislation ran into parliamentary opposition from an early stage, especially from the Green Party which wants to link car taxation to emissions rather then merely the price of a vehicle, so that the more polluting cars pay the most in tax. They also want to introduce tax incentives to encourage the development of, and more demand for, fuel efficient cars.

However, it is thought that this week's agreement between Senator Fielding and the Rudd government will be significant enough to gain the approval it needs from the Senate, after Mr Fielding made a deal with the government that will ensure all tourism operators and farmers are able to claim back the tax after buying four-wheel-drives.

The amendments negotiated with the government provide refunds to farmers and tourism operators so they can claim back the extra 8% car tax from the Tax Office on purchases of four-wheel-drive vehicles costing more than AUD57,180. The amendments allow claims of up to AUD3,000 per year for primary producers and AUD3,000 per vehicle per year for tourism operators.

However, there is still some opposition to the tax, with Senior Liberal Eric Abetz remarking that his objection to its introduction will continue in light of several "flaws", such as the government's argument that the measure is needed to fight inflation, when it will push the price of cars up even further.

Additionally, Liberal senator Simon Birmingham has argued that the proposed amendments do not cover everyone living in regional and rural Australia.

The current law continues to apply until the proposed law is enacted, which means the luxury car tax will continue to stand at 25%, until an official decision is made.