The Fuel Tax Credits Coalition yesterday released a new publication, Powering Regional Australia: The Case for Fuel Tax Credits, designed to “promote a balanced and informed debate on the purpose and impact of the FTCS”
The Minerals Council of Australia has teamed up with a number of groups who could not be termed natural partners to argue that the fuel excise introduced to contribute to the cost of building public roads should not apply to diesel used off-road or in off-grid power generation.
It also argues that the tax provisions are founded on a fundamental principle of sound tax policy that recognises that “taxes on intermediate business inputs are inefficient and distortionary”
The report brings the case for the FTCS to life by highlighting 18 case studies drawn from 18 different businesses and communities – small, medium and large – across Australia.
“The diesel excise rebate is not a subsidy or a handout as the excise paid on diesel was originally introduced to pay for road infrastructure. To put it simply we don’t pump water on public roads and we only receive the rebate for off-road use,” National Irrigators’ Council CEO Tom Chesson said.
“Any government cuts to the scheme would be greeted with dismay by irrigated agriculture that is already reeling from the high cost of energy.”
National Farmers’ Federation president Brent Finlay said food producers were only reimbursed for tax already paid on a key business input.
“The fuel tax credits scheme is critical for Australia’s agricultural sector, where food producers already operate without the subsidies enjoyed by our international competitors,” he said.
“We welcome the fact that the FTCS enjoys strong backing from both major political parties. This report is designed to ensure that the false claims made by the Greens and some environmental activists gain no traction,” MCA CEO Brendan Pearson added.
The group says the report “comprehensively rebuts claims” that the credits are a fossil fuel subsidy.
Imposing a tax on diesel – a critical and unavoidable business input for many Australian businesses – would not remove a subsidy, the FTCC claims, but rather it would impose a new tax on regional Australian businesses.
As a senior Treasury official told a Senate hearing in June 2014, “the principal rationale behind the fuel tax credit system … was to ensure that a number of industries that used fuel off road were not subject to double tax”, FTCC said.
The group claims it makes no sense to impose an effective road user charge in the form of fuel excise on fishing trawlers, harvesting equipment or diesel generators powering community facilities such as hospitals, schools and tourist accommodation located off the electricity grid.
That, the group says, stabs right at the heart of equity and becomes a super tax on regional and remote Australia, further eroding Australia’s efficiency as a number of competitor nations do not impose excise on fuel used as a business input in agriculture and mining industries.
The group said the removal or weakening of the FTCS from Australia’s largest export and import competing industries would undermine industry competiveness at a time when Australia needs to do all it can to expand the economy and secure good jobs, particularly in regional areas.
