The Australian Conservation Foundation (ACF) report on the fuel tax credits (FTC) scheme released today singles out mining activities but is ultimately an attack on regional businesses, masquerading as concern for budget responsibility and fairness.

An unprecedented coalition of groups from the agriculture, fishing, forestry, tourism and resources sectors have joined forces to defend the fuel tax credits scheme against baseless attacks.

Fuel excise was introduced to contribute to the cost of building public roads. It should not apply to diesel used ‘off-road’ or to generate electricity in remote areas off the electricity grid.  The FTC scheme also reflects a core principle of good tax policy design – that business inputs should not be taxed. Like the GST system, fuel tax credits reimburse taxpayers for tax already paid on a key business input.

Hundreds of thousands of producers across a wide range of industries rely on this scheme to keep producing and to stay competitive.  Hacking into fuel tax credits would simply constitute a new tax on regional Australia, with knock-on effects to communities in every state and territory. 

It would undermine Australia’s export competitiveness at a time when we need to expand the economy and support jobs, especially in regional Australia where unemployment has risen in recent years.

The Treasury has consistently refuted the claim that fuel tax credits represent a ‘subsidy’. Treasury has stated that: ‘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 head of Treasury’s Revenue Group told a Senate hearing last year that ‘the principal rationale behind the fuel tax credit system … was to ensure that a number of industries that used fuel off road were not subject to double tax’. He noted further that the fuel tax credits scheme ‘is not a subsidy. It is just what the [tax] base ought to be.’

The FTC regime has received strong support from the mainstream political parties for good reason. It is good policy.  ALP Senator Doug Cameron got it right when he said this in the Senate last December: ‘Carving out particular industries will distort the fuel tax credit system that provides for a rebate on fuel where it is used as a business input.’

The stories of Australians who rely on the FTC scheme can be found at

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