– By David Brown –
At the recent Australian Financial Review National Infrastructure Summit, Scott Charlton, CEO of Transurban, suggested that other taxes, possibly registration fees, may have to rise dramatically because in the future the government will get much less revenue from the fuel excise tax.
Transurban has been a strong believer that technology is changing the nature of transport services and this will directly change the way and the amounts of revenue that can be collected.
It should be quite clear that Transurban wants to have a very active role in the building, operating and maintaining of transport infrastructure. They are pushing for change and they want to be a major player in the way we provide for vehicles and how we toll their use.
The comment on registration was at a panel discussion after Charlton’s main presentation and was an aside to emphasise a point rather than propose this as the major change needed in the taxing system.
As cars and trucks become more efficient and as we develop alternative fuels such as battery power and hydrogen power, we will use less fossil fuels and so lose some tax revenue.
Currently the Australian Federal government collects 39.5 cents per litre on petrol, diesel and a range (but not all) of other petroleum products. The current excise rate on LPG for cars is 12.9 cents per litre.
Australia has a low rate of fuel excise tax compared to many other countries, however the Howard Government stopped the indexing of Federal fuel excise in 2001 but it was reinstated by the Abbott government in 2014. The rate is now indexed twice a year and will go up again on 1st August. The GST is also levied on the cost of petrol (so called double dipping) so the actual amount received by the government is higher.
An estimate of the current average amount of excise raised based on data from the Motor Vehicle Census January 2015 and on the current excise rate is as follows:
| Ave Km per year | Fuel excise per vehicle | |
| Passenger vehicles | 13,700 | $580 |
| Motor cycles | 3,700 | $90 |
| Light commercial vehicles | 16,800 | $800 |
| Rigid trucks | 21,900 | $2,450 |
| Articulated trucks | 87,300 | $19,630 |
| Non-freight carrying trucks | 18,100 | $1,570 |
| Buses | 29,700 | $3,380 |
This would raise over $12 billion in excise a year plus another $1.2 billion in GST.
America has not raised the level of its federal fuel excise since 1993 and so inflation has reduced the value of the tax collected enormously. This has been identified as a major reason why that country is drastically short of funds for adequate maintenance of their road system.
Is a registration fee a fair system? A passenger vehicle places negligible stress on the structure of the road compared to a large truck although even small vehicles, over time, can have an impact on the road surface. For example if many cars hit a pothole, the constant pounding can increase the damage and allow water penetration.
Small vehicles, however, should pay an opportunity cost – if we choose to cater for more cars we have to build more roads.
The current system of charging a high toll on a few roads distorts travel patterns in unwanted ways. We penalise people with a high toll for using a road we want them to use. The free alternative usually takes them on an inefficient path including stop/start traffic conditions and travelling through shopping centres and local streets.
The big push in transport planning is for area wide road pricing. A fuel tax is a general user charge, the more you travel the more you pay, but it is over simplistic. A charge that could more specifically take into account the size of the vehicle, the amount of pollution it makes, where it goes and at what time of the day it travels, is the holy grail of many planners. This would also suit Transurban’s business model.
Some states in America are implementing road pricing. Singapore, which implemented a congestion charge for its city centre in 1975, is planning a road user charge for the whole country.
Two important points are that the system has to be simple enough to be understood and the charges (per kilometre) do not have to be astronomically high.
There is a strong push to actually reduce registration charges when a comprehensive road pricing system is brought in, so as not to appear to be raising taxes overall and to focus charging on direct use (which you can look to modify) rather than on upfront fees.
