Fuel Tax Credit Alliance: fuel tax credits claims wrong again

Reports linking fuel tax credits (FTC) and funding for the environment and diversity programs again misrepresent FTCs as a tax ‘subsidy’ or cost to the Federal Budget.

As repeatedly stated by The Treasury under successive Federal governments, fuel tax credits are not a tax subsidy. Nor have FTCs been considered to represent assistance by the Productivity Commission in its annual stocktake of industry assistance measures. 

It is ludicrous to compare FTCs with government program funding, because FTCs are made available under an administrative system whereby credits are claimed via BAS statements to refund excise on fuel used off-road. 

All industries, not just mining or agriculture, claim them. Exemptions at the pump or rebate schemes for off-road use have been in place since excise was extended to diesel fuel in 1957. 

The FTC system is based on the basic tax policy principle that tax should not be imposed on business inputs. 

Treasury has stated: “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”, while the Productivity Commission has said the FTC system ‘’is not considered assistance as the excise tax on fuel is purported to be a mechanism to pay for roads, which are not used by those receiving the fuel rebate.”

Regional businesses are reliant on diesel to operate heavy machinery off-road and generate off-grid electricity. 

Removing or reducing FTCs would deliberately distort the tax system and slug regional Australia with a new tax. No other industries would face such a tax on an essential business input. 

Debates about tax and Australia’s vital regional and export industries must be based on facts, not tired and discredited claims about subsidies and misleading attempts to link legitimate tax credits with funding for environmental programs.

The Fuel Tax Credits Alliance represents regional business concerned about campaigns misrepresenting FTCs as a tax ‘subsidy’. The Alliance spans Australia’s agriculture, forestry, fisheries, maritime, tourism and mining industries.

FURTHER INFORMATION: Simon Troeth (Minerals Council of Australia)                                    

simon.troeth@minerals.org.au 02 6233 0633/0439 300 335

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