Tim O'Brien | Jul 4, 2011

CARBON TAX

If anyone is really convinced that a carbon tax won't find its way to the petrol bowser, eventually, they could also be convinced that Elvis and the tooth-fairy are shacked-up and living the high life in Vegas.

It's as certain as night follows day: it is perfectly illogical, politically speaking, to introduce a carbon tax to the economy and to not tax one of the primary contributors to Australia's carbon dioxide pollution output.

Transport contributes more than 75,000,000 tonnes of CO2 to Australia's greenhouse gas emissions, representing around 13%-14% of our total greenhouse gas output (that figure flops around a bit; sometimes more, sometimes a little less). So, when you are told that a carbon tax won't be applied to fuel, don't believe it.

Unconvinced? Since when have governments of any persuasion not seen motorists as cash-cows?

Remember that we pay 38.143 cents in Federal Government excise, plus GST (applied to both the cost of the product and the cost of the excise), for every single litre of petrol we buy. And remember the broken promise that GST would not be applied to a tax - as a tax on a tax.

How easily that promise was broken by the architects of the GST, John Howard and Peter Costello.

And also remember, if you can, why the excise component is there in the first place. Like a lot of taxes that are now simply accepted by a groaning populace, the reason for their application is lost to the mists of time.

So here's a short history lesson in case you have forgotten.

The excise component on the price of fuel was introduced by the Fraser Government in 1978 (with John Howard as Treasurer). The objective of the excise was "to redistribute to the community some of the gains producers received from the increased oil prices" (Australian Treasury). Now there's a laugh.

For the next ten years or so it was obscured under a hod-load of equally spurious arguments about another artificial construct, world parity pricing. The excise was later indexed to the CPI by the Keating Government in 1993 before then pegged at a flat 38.143 cents (plus GST) by the Howard Government in 2001.

And why mention excise now? Because behind the Gillard Government's announcement that there "will not be a carbon tax on petrol" was this little sleight of hand: at the behest of the Greens, the Productivity Commission is to examine fuel excise to see if the basis for the excise can be shifted to the carbon and energy content of the fuel.

No carbon tax, but maybe a carbon tax dressed in fuel excise clothes.

That of course will benefit LPG and other 'cleaner' fuels (which is not excised at the full rate for the moment anyway); but will mean higher tax on more heavily polluting fuels... like standard unleaded for instance.

Yup, a higher excise on ULP, and, if the argument is to be followed, a lesser excise on cleaner premium-grade fuels.

Now I'm not against a cleaner environment, nor am I against encouraging us to drive less - and I'm not opposed to a sensibly structured carbon tax. But I am opposed to humbug. The simple fact is that neither party can be believed when it comes to taxing motorists.

If you drive a car, Governments - both Labor and Liberal - will continue to squeeze you. It is simply fact.

What is galling, and what you might rightfully wish to make a fuss about, is that Governments of both persuasions invest so little in making our road and transport infrastructure systems really work.

And what component – for instance - of our transport emissions is contributed by cars sitting idly in massive stagnant grid-locked traffic jams, every morning and every evening?

How much greater is Australia's total greenhouse gas output because of poorly-planned and underfunded transport infrastructure that simply has not kept pace with the needs of the economy and does not serve the community it is there to serve?

So while they’re banging on about tax, and who will and who won’t, let’s also hear what each party has to say about making our road and transport systems work better.

Let’s hear about how they are going to use the money they squeeze from motorists and the transport sector, as well as the taxes we pay as members of the community, to build better roads, to integrate transport infrastructure and to make the system ‘work’.

Their records in Government over 40 years speak for themselves. On fuel and taxes, you should not believe Julia Gillard, nor should you believe the populist nonsense of Tony Abbot.

And in case you think it is that nasty OPEC cartel that is bleeding us dry at the bowser, here's a salutary fact: Western Governments make more out of fuel through taxes and charges than the oil producing countries that pump it out of the ground.

- Tim O’Brien
TMR Managing Editor