Labor to back increase to the petrol tax

Latika Bourke
June 23, 2015
The Age
Labor has caved into the government’s demand that it support an increase in the petrol tax or have the money collected from motorists over the past year refunded to big oil companies instead.
Sources have told Fairfax Media, that despite more than a year of vowing to oppose the increase in the fuel excise, Labor will now back the measure, in the face of the government’s threat to refund taxes collected to the oil companies.
However Labor will make its support conditional – it wants the government to boost by $1.1 billion funding for regional roads.
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The increase in fuel excise is expected to raise $2.2 billion over four years and $19 billion over the decade.
One source said it was a “difficult decision” for the opposition to make but the prospect of billions of dollars of being returned to oil companies was “unacceptable”.
“We’d prefer this money be spent on roads in regional and outer suburban areas rather than handed back to big oil companies,” the Labor source said.
The decision is a political victory for Finance Minister Mathias Cormann who when faced with a roadbock in the Senate decided to introduce the tax hike through a back-door method in late 2014.
“If the measure is not validated within 12 months, and we are very confident that it will be by the way, but if it wasn’t validated by the Parliament within 12 months, the money would have to go back to those that have paid the duty, that have paid the excise; it will go back to fuel manufacturers and to fuel importers who would essentially have a windfall gain,” Senator Cormann said in October last year.
The measure is opposed by the Greens in the Senate, despite their support for taxes on fossil fuels and carbon price signals.
The fuel excise was frozen in 2001 by former Liberal prime minister John Howard as a peace-offering to motorists following the introduction of the GST.