The National Road Transport Association (NatRoad) has warned that any move to scrap the fuel tax credit scheme in the upcoming Federal Budget will have long-term negative financial implications for Australia.

“It may seem like a quick, easy way to fill Commonwealth coffers, but removing the fuel tax credit scheme will drive up the cost of road transport and this will flow onto all goods and products that Australians purchase,” said NatRoad CEO, Warren Clark.

According to NatRoad, most fuel users in Australia pay a fuel excise which is charged at the bowser. Part of the reason for the fuel excise is that generally most road users do not pay directly for their use of roads. Fuel excises are a proxy for the cost of road use.

“Road transport operators running trucks over 4.5 tonnes pay the full excise when they purchase fuel. They can claim a credit for part of this fuel tax in recognition of them using the fuel for a business purpose. Other business types can claim the whole excise,” NatRoad said in a statement.

“For example, the credit for diesel or petrol for a heavy vehicle operator is 15.1 cents per litre and 40.9 cents per litre for all other business uses.

“The proportion of the excise which is unclaimable by road transport operators constitutes their Commonwealth Road User Charge. Road transport businesses also pay for road construction and maintenance as part of their vehicle registration.”

Clark said that the fuel tax excise is based on the long-held principle that direct inputs to production should not be subject to general revenue-raising tax – it is not a subsidy.

“Reducing or removing the fuel tax credit will increase costs for our road transport sector, which in turn will harm the Australian economy and our international competitiveness,” said Clark.

“Fuel costs already account for between 20 and 25 per cent of a road transport operator’s costs. Increasing this cost could have a significant enough effect on margins that some businesses would no longer be sustainable.

“If Tuesday night’s Federal Budget relies on axing the fuel tax credit scheme to raise revenue, NatRoad will fight to reverse this short-sighted decision,” he said.

Extracted from Prime Mover Mag.

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