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More congestion in Canberra

Road charge: A congestion charge for Australian cities was back on the agenda at this week’s tax summit in Canberra.

Tax forum gets wound up over congestion charges, despite government rejection

General News logo6 Oct 2011

CONGESTION charges for Australian cities were back on the agenda at this week’s tax summit in Canberra, but there seemed to be little support for the additional London-style fees for motorists.

Although the federal treasurer Wayne Swan put the vehicle congestion tax on the forum agenda and was present throughout the two days, he has been conspicuously quiet on the issue, perhaps because prime minister Julia Gillard ruled out federal support five weeks ago.

According to News Ltd newspaper reports, Mr Swan “rejected the call” to introduce congestion charges.

The treasurer may also have been influenced by union heavyweight Paul Howes, the national secretary of the Australian Workers Union, who said any politician who backed a congestion tax would be a fool.

Mr Howes said a congestion tax would unfairly burden the wrong people, adding that shift workers had no alternative and could not afford another tax hit.

“It’s all well and good when you walk down the garden path with the fairies to try and work out how these things will operate in a perfect world,” he said, “but how do you change the behaviour of an AWU member who … has to drive to work and has no alternative?“Yes, congestion is a huge issue, but cost of living is the key issue.”

As the peak body of the motor industry, the Federal Chamber of Automotive Industries has no official stance on congestion charging, but new executive director Ian Chalmers was an interested observer throughout the two days of the tax forum and said the issue “got a bit of a run because some cities are looking at the possibility” of introducing the new tax.

80 center imageFrom top: Federal treasurer Wayne Swan, federal opposition leader Tony Abbott at this week's Nissan Australia function, AAA executive director Andrew McKellar.

Mr Chalmers told GoAuto that much of the discussion involved London’s experience, which was initially quite successful in reducing unnecessary trips into the city.

“But it seems that over time people became inured to the tax and returned to pre-tax levels of travel,” he said.

“So the conclusion was that it can be highly effective in the short term, but then just becomes part of the accepted cost of getting into town.”

Nevertheless, two Melbourne-based professors came out in support of a congestion tax.

Melbourne University economics professor John Freebairn quoted a study estimating the cost of congestion at $20 billion a year.

Harry Clarke, professor of economics at La Trobe University, said he supported the tax on the grounds that “congestion costs will double in Sydney and Melbourne through to about 2020 if we don’t address the issue”.

Greens leader Bob Brown said his party backed a congestion charge but stressed that the money raised should be spent on improving public transport.

But Sydney University political economist Frank Stilwell was among those who urged caution over trying to change peoples behaviour changed through taxation.

“As a political economist, I’m in favour of using taxes to change behaviours, but I think we have to be cautious because sometimes the effects can be less impressive than one would hope,” Prof Stilwell told the forum.

Interestingly, the treasurer said in his closing remarks that he agreed that governments should be careful when introducing social taxes.

Federal opposition leader Tony Abbott, speaking at a Nissan Australia function this week, said he was not confident of the forum providing the “positive outcomes” Australia needed on tax reform.

“We’ve had plenty of talk but no constructive action from this Government,” Mr Abbott told journalists.

“The only things that this Government has done in respect of tax are backwards steps, not forward steps.

“What we want to see coming out of this forum is real change for the better and that means lower, simpler, fairer taxes it doesn’t mean hitting us with big new taxes.

“Look, there are all sorts of ideas that are being floated around at the tax forum but governments shouldn’t be running debating societies, governments should be getting on with the job of giving us tax reform and what we have seen from this forum is a talkfest, not policy change.”

Australia’s peak national motoring organisation, the Australian Automobile Association (AAA), urged the forum to support a fairer deal for motorists, ensuring that road transport tax revenues be dedicated to fund stronger investment in transport infrastructure.

Speaking last month, when the forum agenda was released, AAA executive director Andrew McKellar said motorists were already heavily taxed in Australia.

“Total petrol and diesel fuel excise levied by the federal government is estimated to be $13.48 billion in 2011-12. In addition, motorists face state government taxes including vehicle registration fees and motor vehicle stamp duty”, he said.

“But when you look at how much of this revenue is then spent on roads and other land transport infrastructure, there is a significant shortfall. The reality is that motorists are being short-changed.

“We need to ensure there is a dedicated link between the taxes motorists pay and the future approach to funding investment in land transport.

“The AAA is open to looking at future options for road pricing and funding for land transport infrastructure. However, our clear position is that existing taxes, such as fuel excise, must be abolished as part of the reform process.

“Motorists cannot be expected to carry a heavier tax burden than they already bear.”

Mr McKellar said the AAA is also seeking the abolition of state stamp duties and the luxury car tax.

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