The Fuel Tax Credit (FTC) ensures businesses are not disadvantaged by paying a road tax for diesel and other fuels used for machinery and vehicles that don’t use public roads.
Calls from the Grattan Institute to scrap the FTC scheme, under the misguided slogan that it is a ‘fossil fuel subsidy’, are wrong in fact and economics.
Increasing taxes will lead to higher groceries, higher travel costs, higher taxes and hit hard working Australians the most at a time when they need it the least.
The scheme is not a subsidy: it does not lower the price of fuel paid by users and scrapping it will not reduce emissions.
It makes sense that those who use public roads and bridges should help pay to repair them as they cause wear and tear through road taxes.
It also makes sense that those vehicles and equipment that don’t use public roads shouldn’t have to pay a road tax.
Australians get this.
For example, a commercial fishing boat that has a diesel engine shouldn’t have to pay a road tax because it doesn’t operate on public roads.
As well, a farmer using a tractor to harvest their crops on farmland shouldn’t have to pay a road tax.
Every sensible politician understands that we should not be raising taxes on household items when they are already going through the roof.
Removing any part of the FTC scheme will do that.
Australian mining is calling on the federal government to rule out abolishing the FTC and give businesses certainty now.
Emerging from the COVID crisis, the budget is now heading in the right direction, thanks to the significant tax contribution from mining sector and other export industries.
The minerals industry consistently pays significant taxes and royalties to federal, state and territory governments throughout the business cycle.
Ernst & Young estimates the industry made record tax and royalty payments to governments in 2020-21 amounting to $43.2 billion, which consisted of $26.5 billion in company tax – almost 30 per cent of total company tax receipts – and $16.7 billion in royalties.
This contribution – a total of $255 billion between 2011-12 and 2020-21 – will continue to grow.
