We're big enough to debate a congestion tax

Excluding petrol from the carbon tax package doesn’t mean Australian motorists will be any happier with what governments tax them at the bowser and the disconnection with what's spent on the roads.

Federal fuel excise currently amounts to 38 cents in the litre. The Government receives more than $13 billion from this, yet spends only a fraction of this on roads. The Productivity Commission has been asked by the Government to conduct an inquiry into fuel excise arrangements, including an examination of the merits of a regime based explicitly on the carbon and energy content of fuels. Reports suggest it will also examine whether road-user charges are needed to reduce congestion and discourage driving.

In economic terms, road-user charges (or congestion taxes) impose a surcharge on users of a road transport network in periods of peak demand. The Henry Tax Review suggested this was a way to directly fund transport improvements and new infrastructure projects, as well as enable tax cuts in other areas. Motor vehicle stamp duties could be abolished and compulsory third party insurance could become more fairly priced.

So let’s have this discussion and much more at the Government’s Tax Forum later this year. What are your thoughts?

Robert Jeremenko
Senior Tax Counsel

Comments

  1. Robert, it makes sense..but I wonder if any govt, state or federal..will be 'bold' enought to introduce such a scheme? Though we have seen an early start on the Harbour Bridge.

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  2. Robert Jeremenko22 July 2011 at 13:48

    Thanks Nick. I agree with you re the Harbour Bridge. And in Melbourne, CityLink applies higher tolls on heavy vehicles using its toll roads during the day. New York and Hong Kong have rejected congestion charges, but cities like Manchester, Singapore and Stockholm have implemented them. Certainly food for thought for a government with a strong will for tax reform.

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