Petrol tax via the backdoor will hit both motorists and servos

Mark Kenny and James Massola
October 28, 2014
The Age

Petrol prices to up as government increases fuel excise
The Abbott government’s move to make twice-yearly adjustments to petrol tax will add half a cent per litre at the bowser from November, and hit the nation’s 6300 service stations with additional compliance cost of more than $800 per year.
The excise hike, to be undertaken by regulation rather than legislation in order to bypass an uncooperative Senate, provisionally unlocks one of the government’s bigger revenue items outlined in the budget which until now has been blocked for lack of support on the cross-bench.
But the regulations will need to be backed up with proper legislation by the Senate within 12 months or the money raised will have to be refunded.
The government believes the ploy will put Labor and Greens senators in a bind at that time forcing them to choose between keeping the escalating revenue stream, or voting it down forcing the government to pay potentially hundreds of million of dollars collected from motorists back to oil companies.
While the incremental inflation adjustments will raise an expected $167 million from motorists by November next year, little-appreciated new compliance costs for service stations are calculated at $5.06 million according to Treasury estimates.
“It’s not a new tax, it’s the indexation of an old one”: Tony Abbott.
“It’s not a new tax, it’s the indexation of an old one”: Tony Abbott. Photo: Alex Ellinghausen
The detail of the additional cost is contained in the government’s own “cutting red tape” website and comes to light on the same day as it moves to repeal hundreds of millions of dollars worth of “red tape” compliance burdens, hoping to free businesses from such constraints.
The second tranche of red tape repeals is expected to be approved by the lower house on Wednesday, with what the government says are 1000 unnecessary pieces of legislation and regulation to be scrapped.
The Abbott government claims it has cut about $2 billion in red tape since the last election, double its election commitment to cut $1 billion annually.
In parliament the opposition went on the attack over the fuel tax measure, branding it a broken promise, and an “ambush of motorists” despite the excise increase mechanism appearing in the May Budget.
For its part, the government continued to defend the policy change as justified within its broader mandate to repair the debt and deficit “disaster” left by Labor.
Prime Minister Tony Abbott, arguing “it’s not a new tax, it’s the indexation of an old one”, promised that all of the money raised would go to roads.
He said he was “very happy” to see the return of fuel tax indexation.
“This was a budget measure, a reasonable budget measure that was originally introduced by the Hawke government in the days when Labor had real leadership and was really committed to the national interest and I’m very happy to see it coming back,” he said.
“I’ve got to say every single cent raised by this measure will be spent on the better roads that Australia so desperately needs.”
Greens leader Christine Milne attacked the regulatory two-step to avoid Senate scrutiny.
“Tony Abbott is trying to sneak his toll road fund through the back door. He has zero respect for the parliament that the Australian people elected,” Senator Milne said.
“It appears Tony Abbott will stop at nothing to build toll roads from one end of the country to the other.
“Now he is using a sneaky trick to spend money on toll roads that will increase congestion, increase pollution and make life harder for people without access to public transport.
“The Greens will examine the government’s legislation when it is released in order to determine the best way forward.”
With Victoria locked in a tight state election, Opposition Leader Bill Shorten pushed Mr Abbott for the cost to Victoria specifically from the new fuel excise.
The pressure came after Victorian Premier Denis Napthine criticised the hike and the method of its introduction, saying he preferred a proper legislative process rather than regulation.
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