Supply chains around Australia could collapse unless the new federal government stops making trucking companies pay for cuts in petrol taxes, transport groups have warned.

Talks over how to best approach the Albanese government to request a reinstatement of tax credits for petrol purchase will be top of the agenda at a national meeting of the trucking industry this week.

The industry is angry that the Coalition has taken away its tax credits to help pay for its federal budget decision in late March to cut fuel excise taxes by 22¢ per litre until September 30.

Until March 29, truck drivers received a tax credit for petrol or diesel worth 17.8¢ per litre, allowing them to claim money back on some of the fuel tax they pay for carrying goods around Australia.

But the Coalition suspended that credit from March 30 until September 30 to ease the financial pressure caused by the loss of about $3 billion in revenue from slashing petrol taxes.

Kym McDermid, CEO of Adelaide-based Diamond Group which operates around 80 vehicles, said the removal of the fuel tax credit has hurt the company’s cash flow and that it has taken a one-off hit of $50,000 to its bottom line.

“It is very difficult to explain to a customer expecting a decrease in their fuel levy that there will be none, instead it will hurt inflation by increasing,” Mr McDermid said. “The small operator does not have that luxury, as their customers simply ignore them.”

Trucking associations claim that without the tax credit, companies will go under.

“The majority of the industry is telling us they will collapse if the fuel tax credit is not restored by the end of September, and almost the entire industry is telling us that if the cut continues after September they will all go broke,” said Steve Shearer, executive officer of the South Australian Road Transport Association.

Mr Shearer, who is co-ordinating the Australian Trucking Association’s (ATA) approach to the new government, argued that removing the tax credit also put at risk “the survival and prosperity of the broader economy and all the businesses that we service”.

Trucking companies are already under pressure from staff shortages due to COVID-19 illness and strong demand for transport and logistics services from all sectors of the economy.

The industry wants the fuel tax credit to be backdated to March 30, and if the government does not agree, to at least permit tax credits to resume on July 1.

The SA Road Transport Association has been surveying truck drivers on the impact of the fuel tax credit suspension. Of the 250 responses to date (half from SA and half from interstate) more than 90 per cent say they will survive if the tax credit is restored from July, but only 43 per cent expect to survive if the tax credit does not get restored until September.

Truck drivers are worried that the new government will keep the 22¢ per litre cut in the fuel excise tax going beyond September 30 to assuage financial pressure on consumers, who are struggling with rising costs for everything from mortgages to electricity to groceries, and that it will also fail to resurrect the fuel tax credit.

Prices remain high

Fuel prices have remained stubbornly high, even with the current fuel excise cut, with the average retail price of petrol nationally running at $1.99 per litre in the week ending May 22, according to the Australian Institute of Petroleum.

While petrol prices dipped immediately after the fuel excise cut, they have since rebounded close to near-record highs.

The value of the fuel tax credit – which fluctuates in line with the consumer price index – is calculated from the difference between the diesel fuel excise rate and the road user charge, which is levied to cover the cost of wear and tear on roads by heavy vehicles.

Most truck drivers who run small transport companies claim the credit from the tax office every quarter and use it to help pay tax liabilities in their Business Activity Statements.

Mr Shearer said most customers of trucking groups had demanded the fuel excise cuts be passed along in full, which is why truck drivers could not offset the loss of the tax credit.

Mr Shearer said truck drivers typically receive thousands of dollars back from fuel tax credits, ranging from $2000 to as much as $15,000.

The ATA wrote to former prime minister Scott Morrison in early May asking the government to retrospectively restore the fuel tax credit from March 30 if it was re-elected.

“The budget decision for consumer fuel price relief has produced an unintended consequence,” ATA chairman David Smith said in the letter.

“The loss of the tax credit cannot be absorbed by truck operators, large or small. Operators who cannot replace or offset those funds will inevitably collapse in the coming months.”

Mr Shearer said the letter had been ignored by the Coalition despite several approaches to former finance minister Simon Birmingham’s office for a response.

“They just buried their head in the sand,” he said. “They made a huge blunder and didn’t want to own up to it.”

Treasurer Jim Chalmers’ office did not respond to a request for comment.

Big trucking groups Linfox and Toll declined to comment.

Extracted in full form: Truckies gear up for fight on tax credits (