Trucking protected from fuel tax increase

By: Brad Gardner

Fuel tax credit will shield trucking operators from an increase to the fuel tax next month.

Trucking protected from fuel tax increase
The fuel the excise will rise from 38.1 cents per litre to 38.6 cents per litre on November 10.


The Federal Government’s plan to increase the fuel excise next month will not affect the trucking industry.

Finance minister Mathias Cormann today announced the excise would rise from 38.1 cents per litre to 38.6 cents per litre on November 10.

Trucking will, however, be shielded from the increase through the fuel tax credit system.

"The Government’s planned increase in the fuel tax rate will not affect the net fuel price paid by trucking operators," Australian Trucking Association (ATA) government relations manager Bill McKinley says.

"Trucking operators will not be affected by this because the fuel tax credit rate will rise by the same amount."

Cormann says the impact of the tax increase on households "will be modest".

"For a typical household, which consumes 50 litres of fuel per week, the estimated price impact of this fuel excise indexation will be about 40 cents per week by the end of 2014-15," he says.

The Government is using a tariff proposal to raise the excise, allowing it to bypass the Senate where it does not have the support for the policy. Parliament has one year to validate the proposal. 

As announced in this year’s budget, the Government intended to raise the excise on August 1 and index it biannually.

Cormann says indexation will now begin on February 1 next year. He says the move is expected to generate about $2.2 billion in the next four years and about $19 billion by 2024-25.

The excise has been 38.1 cents per litre since 2001, when then prime minister John Howard removed indexation.

The ATA earlier this year highlighted areas that needed to be addressed due to the re-introduction of indexation, namely the impact on those paying their business activity statements (BAS) quarterly.

The Government’s plan would have led to quarterly BAS payers missing out on claiming credits at the higher excise rate until two months after indexation occurred. 

"This would obviously be undesirable. It would mean that quarterly BAS payers would be subject to a higher effective tax rate than monthly BAS payers," the ATA wrote the Government in June.

The ATA also sought reductions in the number of fuel tax credit adjustments each year. Initially, the adjustments would need to be made on February 1 and August 1 to account for biannual indexation and then on July 1 in some years due to changes to the road user charge.

The ATA proposed that changes to the road user charge should be made on August 1 to reduce the administrative burden on trucking operators.

The Government addressed both of the ATA’s concerns in its Fuel Indexation (Road Funding) Bill but it has not yet passed Parliament.

However, Cormann today committed to introducing legislative amendments this week to ensure the tariff proposal did not affect those claiming fuel tax credits.

He says the Government intends for the measures to pass Parliament during the current sitting.

"The Government’s intention is to ensure that there is no financial impact arising from this implementation by way of tariff proposals over the next 12 months for fuel tax credit recipients, as well as cleaner fuels grant and ethanol production grant recipients," he says.

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