Small transport operators to benefit from tax changes, but uncertainty surrounds road-user charge reform
May 7, 2010
Sections of the transport industry will get concessions under reforms to Australia’s taxation system, but uncertainty still remains over whether existing road charges will be overhauled.
The Rudd Government this week released its response to a review into Australia’s taxation system by Treasury Secretary Ken Henry.
The company tax rate for small businesses will drop from 30 to 28 percent from the 2012 financial year. Larger firms will begin paying 28 percent from the beginning of the 2014 financial year.
Small businesses, those with less than $2 million in annual turnover, will be allowed to write-off assets up to $5,000 and depreciation requirements will also be simplified. The review recommended the cut-off at $10,000.
“The changes will let them write-off many assets more quickly, increasing their cash flows at a time when they are investing to grow,” Treasurer Wayne Swan says.
The tax review recommended dropping the company rate to 25 percent. While not ruling lowering the figure from 28 percent, Swan says it is not affordable to do so right now.
ROAD USER CHARGES REFORM DELAYED
Rudd has also deferred a shake-up to road user charges advocated by Henry.
Henry recommends fast-tracking a scheme to collect money from the transport industry based on a vehicle’s mass, its location and the distance it has travelled.
According to the review’s findings, the system would mean transport operators would pay their own specific costs instead of cross-subsidising other companies.
The document says there would be an incentive for operators to avoid routes and vehicles that cause the highest costs, but they would have access to roads and bridges if they were willing to pay.
Revenue, the report goes on to say, would be directed into road maintenance projects.
“The revenue from efficient charges could help finance new urban transport infrastructure, and cover the cost of heavy vehicle damage,” the review says.
However, the report suggests retaining a network access charge or a variable charge because governments would not recoup enough funds for the full cost of operating the road network.
Henry also recommended heavy vehicles pay an additional charge on routes where road freight is directly competing with rail that must recover its capital costs.
Furthermore, the review proposes applying a tax to be indexed on all fuels used in road transport on the basis of energy content.
“Heavy vehicles should be exempt from fuel tax and the network access component of registration fees if full replacement charges are introduced,” the review says.
Henry has recommended a congestion charge that would vary depending on the time of day.
“City roads would be less congested during peak periods, with higher travel speeds and shorter travel times saving time for road users, reducing vehicle costs and reducing greenhouse emissions,” the review states.
“In general, congestion charges should apply to all registered vehicles using congested roads.”
Revenue from the scheme would go back to the community to fund public transport projects.
In response to the proposals, Swan says: “Well, we are not going to pursue those recommendations at the moment.”
The Government has listed proposals it will not introduce, such as indexing the fuel tax, but it has not ruled out changes to road charges.
NOT SUCH A SUPER IDEA
Employers’ superannuation obligations will increase from nine to 12 percent by 2020, but there will be a three-year lead in time before changes gradually happen to give businesses time to adapt.
The reforms are due to be funded by a new 40 percent tax on the profits of mining companies from July 1, 2012.
The Opposition has already indicated it may block the proposed tax, fearing the impact it may have on the resources sector.
“The package I have outlined just now depends entirely on the successful implementation of the resource profits super tax. No super profits tax – no super investments, infrastructure or tax cuts,” Swan says.