AUSTRALIA’s most productive industries including agriculture have again been forced to defend the Fuel Tax Credit Scheme in the run up to the Federal Budget, which will be delivered by the Turnbull government on May 3.
The 13 industry organisations representing some of the biggest economic contributors and employers to the Australian economy have again combined to demonstrate the importance of the scheme say it powers regional Australia.
It followed an ongoing campaign by the Greens and radical environmental groups that the fuel tax credit scheme is a subsidy. This is despite Treasury stating: “Fuel Tax Credits are not a subsidy for fuel use, but a mechanism to reduce or remove the incidence of excise or duty levied on the fuel used by business off-road or in heavy on-road vehicles.”
The latest attack came only yesterday when the Labor-aligned green group WWF called on the ALP to use next week’s budget to “commit to a phase out of wasteful fossil fuels subsidies, and instead use the $7.7 billion plus savings per year to accelerate this Climate Change Action Plan.”
The industry organisations, which collectively call themselves the Fuel Tax Credit Coalition, have released a new publication explaining how the fuel tax credit scheme operates, the principles underpinning its operation, why it is important and three case studies illustrating the practical benefits of the scheme.
According to the coalition the purpose of the fuel tax credits scheme is to remove the effect of fuel tax on business inputs; the same tax policy principle that underpins the GST.
“The fuel tax credit scheme is vital to the competitiveness of industries operating in regional Australia. Large export earning industries such as mining, agriculture and tourism rely on diesel to operate heavy machinery off-road and to operate in remote areas off the electricity grid,” a statement issued by the group reads.
“Any changes to existing fuel tax credit arrangements would amount to a new tax on regional and rural Australia and would hit industries and jobs in rural and regional Australia hard.”
National Farmers Federation chief executive officer Tony Mahar said the fuel tax credits scheme went beyond the vehicles operated on privately maintained roads.
“It ensures equity in the pricing of fuel that farmers use to operate their diesel engines and irrigation infrastructure. Even a minor cut to the rebate would have substantial impacts on farm businesses.
“In many cases, the use of diesel engines on-farm has underpinned innovative irrigation systems that have reduced electricity and water waste in regional Australia.”
Ross Hampton, CEO of the Australian Forest Products Association, said the fuel tax credit was not a subsidy as the excise paid on diesel was designed to underpin road infrastructure investment.
“Most forest industry activities do not occur on public roads and we only apply the credit to off-road uses, such as harvesting trees or fighting fires in the bush,” Mr Hampton said.
“Any changes to the fuel tax credit scheme would have a major impact, especially in the highly competitive commodity markets where our businesses operate.”
Katherine Winchester, the chair of the National Seafood Industry Alliance, said maintenance of the fuel levy rebate was vitally important to the profitability and continued viability in the Australian seafood industry, particularly the wild-catch sector.
“This rebate was never a subsidy but, rather, simple recognition of the fact that a tax intended primarily to fund provision of road infrastructure should not be levied on a non-road user like the fishing fleet,” Ms Winchester said.
Minerals Council of Australia chief executive Brendan Pearson said the fuel tax credit scheme represented sound taxation policy as it is designed to avoid the job threatening effect of double taxation.
“The Fuel Tax Credit Coalition appreciates the continuing support of both major political parties for the scheme and their refusal to listen to false arguments from the Greens and other environmental activist groups for the scrapping of the scheme,” Mr Pearson said.
Any changes to the fuel tax credit scheme will threaten Australia’s largest export and import competing industries competitiveness at a time when Australia must do what it can to expand the economy and secure good jobs, particularly in regional areas, the alliance says.
