News

Road User Charge A Priority Issue

5.5.2010

Australia's peak motoring body, the Australian Automobile Association, has called on the Federal Government to fast-track the debate on road user charging, saying private motorists continue to pay more than their fair share to use Australian roads.

AAA, whose constituent motoring clubs represent more than 6.5 million members, said the Henry Tax Review released this week contained a raft of recommendations and support for the introduction of a road user charging system which ensured those who used the road most and caused the greatest wear and tear on the road should pay their fair share.

AAA's call comes following an independent report prepared by ACILTasman economic advisory group, which highlights the Henry Review arguments and the fact the Government has put most of the Henry recommendations on the "back burner".

AAA Chief Executive, Mike Harris, said the Henry Review presents a well-reasoned argument in favour of a new road charging regime, including congestion pricing and reform of fuel taxation.

"It is a strong endorsement of the importance of implementing a fairer system of road charging and taxation, and Mr Henry makes it clear that private motorists are more than paying their way to use the Australian road network," Mr Harris said.

"It is evident from this report, and other research, that motorists are paying more than their fair share – it is time for the Government to get on with looking at the development and introduction of a fair system of road user charging."

Mr Harris said the ACIL Report indicated Henry has recommended abolition of the following motor vehicle related taxes:
• insurance taxes
• stamp duty on the purchase of motor vehicles
• luxury car tax
• fuel and vehicle registration taxes, if replaced by more efficient road user charges. 

"The Henry Tax Review was scathing in its assessment of existing road transport taxes, commenting that they are not appropriate to meet future requirements," the ACIL Tasman report states.

"It found that existing road transport taxes have been designed with the specific objective of raising revenue, but will be inadequate to deal with future requirements based on increasing congestion problems."

The ACIL report said the Henry Tax Review has given qualified support for the introduction of congestion pricing, saying: "Governments should analyse the potential network-wide benefits and costs of introducing variable congestion pricing…..across heavily congested parts of the road network.

"Introducing congestion pricing does not negate the need for expanded supply of roads in many cases."

The ACIL report also noted the Henry Review observations on heavy vehicles wear and tear on roads.

"The Henry Tax Review has also highlighted the inefficiencies in the current road transport tax arrangements for heavy vehicles, which consist of a road user charge levied at a flat rate per litre of fuel (independent of the vehicle, where it is driven or the actual road-wear caused) coupled with registration charges that increase with vehicle size," the report states. 

"Other problems highlighted by the review included the fact that existing charges do not fully reflect the wear that trucks do to individual roads, and that current arrangements prevent road owners from receiving compensation from users for damage to their assets

"While the Henry Tax Review acknowledged that heavy vehicle charges covered the aggregate costs of road-wear they cause, they did not cover the total social costs they impose on providers and users of Australia's road transport system

"This situation in turn imposes hidden costs on other road users and taxpayers.  As a consequence, heavy vehicle users are currently free riding on motorists."

Mr Harris said the Henry Review and the ACIL report make a number of other comments and recommendations in support of reforming road and fuel taxation.

"We are seeing a number of organisations - including Infrastructure Australia, National Transport Council and Infrastructure Partnerships Australia – coming out in support of a road user charge and calling on the Federal Government to expedite such a system," he said.

"AAA and our member clubs support these calls and ask the Federal Government to take up this challenge as a matter of urgency."

 

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