Tony Windsor (New England, Independent) Share this | Hansard source

I raised an issue in question time yesterday with the Prime Minister in relation to fuel taxation, particularly in relation to the emissions trading system that is going to be implemented in 2010. I will follow up on a couple of the points. Firstly, I was pleased with the Prime Minister’s answer. In terms of referring to the old taxation arrangements of fuel excise and the new proposed taxation arrangements via the emissions trading scheme and the impact that that will have on the price of fuel, I was pleased that the Prime Minister indicated that it would be a subject of the Henry review into taxation. I will explain the reasons for that question, because I think there are some underlying issues here, not the least of which is the climate change debate, but also the transparency of our taxation system.

Currently we have a taxation system in Australia on petrol and diesel that is based on a fuel excise scheme. That is locked in at 38c a litre at the moment. The history of that goes back to when it was a road maintenance tax in a sense. Partly it was implemented because of a prior oil shock. Prime Minister Fraser at the time suggested that we should prepare ourselves for the future by moving to a global pricing arrangement and also having an excise placed on the use of fuel, partly to discourage people from using V8 engines et cetera so that fuel efficiencies would come into place. Those things are all very good, but they are very much last century. A major proportion of that tax take was in fact into consolidated revenue. If you look at the 38c a litre that we have today, about 8c goes into roads for maintenance and construction. Some would say that we do not have direct hypothecation, but that is almost irrelevant in this argument.

Road users are paying about 8c of their 38c for road maintenance and construction; it comes to about $3 billion in the budget papers. The other portion is essentially into consolidated revenue, not to mention that there is also another 15c a litre or $5½ billion received that goes through to the tax via GST, part of which is the tax on a tax component that the Prime Minister is also looking at. If we look at the bulk that is received into the coffers, there is about $14.4 billion currently received. If we reduce the 8c a litre for road maintenance and construction, and I think that that would be a transparent tax arrangement that most people would look at, that brings us back to 30c a litre or $11.4 billion. That is still a lot of money, but from that bulk amount of money you have to deduct the fuel tax credit scheme to eligible businesses, which is about $4¾ billion. Essentially, you are back to a shortfall of $6.6 billion if you revisit the way in which this tax is structured in light of the emissions trading scheme.

We are told by many that the cost onto petrol of an emissions trading arrangement will be roughly 17c a litre. In effect, if the Henry report revisits the taxation arrangements for fuel, you can have a system where you send a transparent message to motorists that they pay for the maintenance and construction of roads through a fuel tax and that they pay for the pollution that they cause through an emissions trading charge, which some people would call a fuel tax. In doing so, you do not necessarily have a situation where you add another 17c onto the current taxation arrangements.

I think the Prime Minister is setting a precedent—it is slightly different but nonetheless it is a precedent—by saying that the Henry report will look at the GST on excise arrangement, the 3.8c a litre. We have had this massive debate about the 5c a litre and the 3.8c a litre. I think we do have to do something about climate change, and I would encourage the government to do something about it—it is a very important issue—but I think they have got to make sure that the fuel taxation messages that they are sending are transparent and not based on pre climate change tax agendas. (Time expired)

See this speech in context