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Bus industry unfazed by new fuel tax

While the trucking and taxi industries are troubled by a new tax on alternative fuels, the bus industry says there’s little to worry about

By David Goeldner and
Brad Gardner | June 23, 2011

The price of alternative fuels will rise from December 1 this year after the Federal Government passed new legislation this week extending the coverage of the fuel excise regime.

Liquefied petroleum gas (LPG) and liquefied natural gas (LNG) will now be taxed, with the price beginning at 2.5 cents per litre and rising to 12.5 cents over a five-year phase-in period.

The new arrangements will also apply a tax of 19 cents for every cubic metre of compressed natural gas (CNG) used extensively in the bus industry.

Bus Industry Confederation Executive Director Michael Apps says for those using alterative fuels, bus operators will still be able to claim the diesel and alternative fuels rebate, and the net effect should be nil for heavy vehicles.

“The bill was introduced by the Howard Government to make excise on all fuels more relevant to energy efficiency and productivity,” Apps says.

He says the legislation is a process of equalising all fuels in the context of an excise rate that equates to the energy rating.

“There will be an upfront cost because fuel will be more expensive, but from a bus operators’ point of view they will be much better off than a taxi operator who will have no capacity to claim the rebate.”

Apps says that from a broader industry perspective the legislation is the right outcome in the way fuels are taxed.

“This has been part of a long term fuels and energy strategy that has been coming for quite some time,” he says.

“The reality is the bill has just been passed, and it’s part of a broad view on how we tax all fuels which have been excise free – and heavy vehicles have the advantage of getting the rebate.”

Apps says if the rebate was to be removed then there would be an ‘issue’ for the industry.

But heavy vehicle operators will be eligible to claim a rebate under the fuel tax credits scheme.

The Federal Government has committed to reimbursing biodiesel, ethanol and renewable diesel users the full 38.14 cents-a-litre fuel excise for the next 10 years.

Small Business Minister Nick Sherry says the five-year phase-in period will give affected parties time to adjust to the changes.

He says the use of alternative fuels will continue to grow despite the introduction of the tax.

“To continue to exempt these fuels from fuel taxation does not provide for a sustainable fuel tax system,” he says.

“It is not sustainable that users of petrol and diesel are the only contributors through the fuel tax system to the cost of the road system.”

The new tax is expected to deliver about $500 million to government coffers over the forward estimates, which Throsby MP Stephen Jones claims will be invested in the road network.

“It is a road user charge and it enables the commonwealth government to invest much needed funds into our national highways,” he says.

Jones says it is untenable that motorists driving LPG-powered vehicles do not contribute to repairing existing or building new roads.

“Vehicles powered with LPG represent some of our heaviest road users,” he says.

Despite former Treasurer Peter Costello announcing the policy back in 2003, the Opposition turned its back on the tax on the basis it would undermine investment in alternative fuels and hit struggling families and businesses.

Liberal MP for Gilmore, Joanna Gash, says the tax will affect the transport industry through freight and production costs.

“It is an unjustified and unfair impost. The tax will impact the taxi industry, couriers, freight carriers and anybody who relies on vehicle transport propelled by LPG,” she says.

The Liberals’ Steven Ciobo, who holds the Gold Coast seat of Moncrieff, says the new tax penalises those who have adopted cleaner fuels.

He says the Opposition walked away from the policy because it would drive up cost of living expenses.

Although he backed the Federal Government’s decision, New England Independent Tony Windsor called on it to invest more of the revenue from fuel tax into local roads.

While saying the excise and GST contribute about 50 cents a litre in tax, Windsor claims only about 8 cents a litre is being put back into roads.

“I make the plea to both sides of parliament that it is about time we put more of the revenue from the fuel excise into our local roads,” he says.

Assistant Treasurer Bill Shorten says Australian LPG prices will be still be amongst the lowest in the OECD even with the imposition of the new tax.

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