FREQUENTLY ASKED QUESTIONS

Are fuel tax credits are a “subsidy"?

No.

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The Australian Treasury has repeatedly stated that the Fuel Tax Credit Scheme is not a “subsidy”.

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"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.”

(2011 submission to G20 Energy Experts Group)

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"It is not a subsidy. It is just what the base ought to be.”

(Senate hearing, June 2014)

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Fuel tax credits are not considered a tax expenditure by Treasury, nor assistance by the Productivity Commission

Since diesel excise is not tied directly to road funding, all off-road users should pay

Diesel Fuel excise is an implicit road user charge. That’s why a “road user charge” applies to businesses and machinery using public roads.  If a business, farmer, commercial fishing boat or miner uses diesel machinery that does not use a public road, there is no rationale for them being charged for that use.

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“This combination of annual motor vehicle registration and fuel excise could be viewed as a crude ‘two-part tariff’ for road usage. While road taxes are not hypothecated (that is, earmarked) to road spending, revenue from these taxes does cover the direct cost of infrastructure spending on roads and bridges...”

The Henry Review

If we simply capped fuel tax credit claims, that would would leave most diesel users unaffected

Most farmers, irrigators and tourism operators use large amounts of diesel and would be hit by arbitrary caps, especially the most remote operators.

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Any attempt to cap or carve out industries would undermine the sound policy basis of the fuel tax credit system.

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Charging a road tax for diesel used off publicly funded roads is simply bad tax policy and would primarily hit regional industries and communities and force up the cost of many essential daily items.