Queensland Premier Peter Beattie has suggested that Prime Minister John Howard plans to use the extra revenue generated by the higher price of fuel and its various taxes to fund increasing spending on roads, defence and technology.
On top of the amount of extra tax coming from higher fuel costs, Beattie says the federal government underestimated GST registrations by half a million and that extra revenue could also be used to counteract the money lost if fuel excise were frozen.
"The proof (of how much extra money is received) will be in the December mid-year review of the Federal Budget," he says.
"That's why John Howard is already making up his shopping list of defence expenditure, together with hints about more technology and road funding."
Beattie told the Labor Party's petrol price inquiry in Brisbane today that his call for a freezing of the February indexation of fuel excise is a much smaller concession than the British government's decision to cut excise by 10 cents a litre.
The Queensland government's submission to the inquiry recommends that the Commonwealth:
- freeze the February excise indexation increase, arguing that motorists should not be exposed to a further increase in petrol prices of up to 3 cents a litre, or
- redirect the windfall revenue to additional road construction expenditure.
The submission argues that the government has significant room to move on either of these initiatives because of the extra revenue generated through Resource Rent Tax, Crude Oil excise and excess GST through inadequate adjustment of the excise in July and higher petrol prices.
"(Economic consultancies) Econtech and Access Economics have both estimated that only 0.4 cents per litre of the 1.5 cents-per-litre savings from the GST will be realised in the short term," Beattie says.
"The result is we have a tax grab on a tax grab on a broken promise."