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AAA renews calls for road-user charges
Road user charges should replace fuel excise tax, state registration fees: AAA
16 Jun 2015
By IAN PORTER
THE Australian Automobile Association (AAA) has urged the federal government to ditch the $17.6 billion fuel excise tax and replace it with the more transparent road-user charge as a fairer way to raise revenue from motorists and the trucking industry.
The peak body for the seven state motoring clubs such as the NRMA, RACV and the RAC in WA says it also wants the federal coalition to work with state governments in removing about $9 billion in registration fees and stamp duties, replacing them with the same road-user charge.
A road-user charging system would be based on the type of vehicle, how many kilometres the vehicle travelled, on which roads and at what times of day.
The AAA says it believes that motoring is taxed more often than any other area of economic activity, yet less than half the cash raised is spent on roads.
It argues that a road-user charge would be a fairer and more transparent way of collecting revenue from motorists and the road transport industry.
The peak body says that roads and motoring are the only forms of infrastructure – others include services such as telecommunications, gas, water and electricity – that does not employ a user-pays system.
In its submission to the Taxation White Paper being drawn up by the federal government, the AAA highlighted the combined total that will be collected through various taxes.
“The AAA estimates that more than $34 billion will be collected from motorists in a range of taxes and charges from all Australian governments in 2015-16,” the association said in its submission.
This includes $17.6 billion in fuel excise and the goods and services tax paid on fuel.
The AAA points out that motorists get slugged with up to four taxes when they buy a vehicle – stamp duty, the GST, customs duty on vehicles purchased overseas and potentially, the luxury-car tax (LCT), depending on the model.
Then they get taxed up to five times when running the vehicle, through registration fees, driver’s licence fee, excise on fuel, compulsory third party (CTP) insurance and potentially, the fringe benefits tax.
However, the AAA said in the submission that motorists get to see less than half of the $30-plus billion revenue raised each year actually being spent on roads.
“The return motorists get in terms of infrastructure has historically been low,” the AAA points out.
“Throughout the period 1998-2018, motorists will receive only 47.4 cents in the dollar on roads from fuel excise paid,” according to the submission.
The projected tax take of $34 billion in 2015-16 includes $6.1 billion in petrol excise, $9.1 billion in diesel excise, $3.7 billion in GST on new vehicles, $2.7 billion in fleet-related GST, $2.4 billion in petrol GST, $450 million in LCT and $400 million in customs duties at the federal level.
And that is after the deduction of fuel tax credits that totaled $5.4 billion in 2012-13. The mining industry claimed $2.1 billion of that.
The AAA says that the fuel tax credits are available to industries that use roads less than the general public, such as mining and farming.
“This implies a link between fuel excise revenue and road funding, when there is in fact no clear link.” At the state level, the tax take will include $5.2 billion in registration fees, $2.5 billion in stamp duty, $1.3 billion in tolls and $450 million in licence fees.
The AAA recognises that it will take some time to organise road-user charges so it has recommended, as an interim measure, that the government undertake to spend at least 50 per cent of the revenue raised from motorists on roads and infrastructure.
This would result in a larger dedicated revenue stream for road building than will be achieved under the government’s own road-funding model in 2016-17 and future years.
The table shows that 50 per cent of the excise raised in 2016-17 would be $4.3 billion, more than seven times the $680 million that would be raised under the government’s road-funding model.
This model was introduced in the 2014-15 budget and saw the effective reintroduction of indexation for fuel excise, with the extra revenue dedicated to roads. The estimated revenue going into the special account created for the purpose will increase to $1.9 billion by 2020-21.
However, the government has forecast that it will spend $8.4 billion on roads in 2016-16, $6.9 billion in 2017-18 and $4.2 billion in 2018-19.
“In the near term, the guaranteed level of funding under the government’s proposed model is inadequate and is only a fraction of the current levels of road funding.
“In the longer term, there is a concern about the sustainability of the special account as it attracts an increasing proportion of the total fuel excise revenue.”
The AAA says it is concerned that, as the take from the excise indexation grows, the government may reduce road spending through other programs such as the Investment Road and Rail program, Roads to Recovery program, the Black Spot program and the Bridges Renewal Program.
The AAA submission also highlights some frustration with the decision-making process that goes with major infrastructure decisions.
In a recommendation that will ring bells in Victoria, the AAA suggests that road funding decisions should be taken away from politicians, avoiding unseemly disputes about which roads to build, such as the recent furore over the East-West Link project in Victoria.
The proposal to devote 50 per cent of the excise revenue to road funding would be more transparent and provide a greater link between the revenue raised and the demand for roads, the submission says.
“Over time the AAA would like to see this funding provided to an independent road fund that would make long-term decisions regarding road investment priorities and de-politicise the funding allocation process.”
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