AAA Sees “More Work Needed” in Fuel Tax Reform


The Australian Automobile Association, while describing the Government's overhaul of the fuel excise system as a step in the right direction, has called for further reform.


AAA Executive Director, Lauchlan McIntosh, said that while the announcement was necessary to reduce uncertainty, complete reform of the fuel tax system was overdue and essential. He said a properly structured road user charge briefly mentioned by the Prime Minister yesterday, was needed to replace all excises, and like other charges be subject to the 10% GST.


"Fuel taxation arrangements in Australia have a number of serious shortcomings, are regressive, and subject to a raft of various methods of application and subsidies. The GST was introduced to generate increasing revenue and broaden the tax base. Keeping the existing fuel excise goes against the principle of taxing all goods and services equally," Mr. McIntosh said.


"Many studies point to the fact that motorists more than "pay their way" including the costs of road wear, safety and environmental impacts and revenue from road users should be directly linked to road investment.


"The Cabinet decision goes some way towards simplifying what is a highly convoluted, confusing and unfair fuel tax system and the AAA supports the government's decision to continue the freeze on petrol excise at 38.143 cents per litre until at least 2012.  This decision means petrol prices should not increase as a result of government taxes for at least another 8 years," Mr. McIntosh said.


"We also note the incentives that will apply to fuels like LPG. The decision will ensure LPG remains a cheaper fuel than petrol."


Mr. McIntosh said the Prime Minister's commitment to announce broad-based reforms to future road funding early in 2004 was in line with earlier commitments to national transport reform. "We assume the Prime Minister is referring to the AUSLINK proposal. AAA supports reform of the way we plan and fund roads in this country. "We need to take a more strategic, integrated and long-term approach to transport infrastructure needs," he said.


"Wider consultation with consumers will be necessary to ensure the reforms are acceptable. Motorists do not expect to pay more for road and transport services than they are already paying.


"We look forward to the announcement and expect it will include a substantial increase in road funding. Road funding at both the Commonwealth and State levels has fallen well behind basic maintenance needs. The Department of Transport and Regional Services estimate of the shortfall for the National Highway alone totals $2 billion over the past five years," Mr. McIntosh said.

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