CEDA Federation reform report backs tax hike for trucking

Lawyers say fuel tax fails to reflect road use and damage done and that reform should give states more roads cash

CEDA Federation reform report backs tax hike for trucking
Professor Stephen Martin says State Governments are held to ransom by Canberra


Making trucking pay more tax and having that take go directly to the States for roads is a central part of road infrastructure advice from a Federation reform study.

Among other things, the Committee for Economic Development of Australia’s (CEDA) A Federation for the 21st Century report calls for State Governments to extend road-use charging.

It also calls for fuel taxes to go directly to States specifically to build and maintain roads.

The main trust of the report as a whole is tackling the disconnect between revenue-raising and expenditure responsibility.

The solutions as they relate to road funding echo conclusions seen in National Transport Commission and Productivity Commission reports.

"We need to move away from State Governments being held to ransom by the Federal Government and match service delivery responsibility with funding," CEDA chief executive Professor Stephen Martin says.

"Currently, for example, the Federal Government fails to deliver suitable levels of funding for transport infrastructure because while it collects the majority of revenue, it is not responsible for delivery.

"Distribution of Federal Government funding to the states in areas vital for the economic and social wellbeing of Australians, such as health and education, should not be swayed by politicking."

In a section on public infrastructure, senior lawyer Bree O’Connell and partner Brad Vann of law firm Clayton Utz argue that present funding structures must be redrawn as they are leading to "congestion on roads, and at ports and airports".

"In addition to budget cuts, the Commonwealth Government is contending with an unsustainable decline in fuel excise revenue because new technologies have led to lower fuel consumption, which reveals the flaw in linking revenue with a measure that does not reflect actual use. Therefore, the need for more innovative funding options is apparent," they write.

They call for a clearer and closer correlation between cash raised, spending of it and which level of government is doing the spending, along with a deepening of ‘user-pays’.

"Transparent pricing with hypothecation funding of service delivery can also lead to more equitable pricing for a service by ensuring that the users deriving the most benefits from the service are making the greatest contribution to the provision of the service," the lawyers say.

"For example, current road-related charges in Australia, being vehicle registration fees and fuel excise, lack transparency and are linked to the nature and fuel efficiency of a vehicle rather than the use of roads.

"When one considers also that fuel tax credits are provided to heavy vehicles, it is clear that potentially those users who derive the most benefit from the roads make comparatively smaller contributions to the provision of roads and road maintenance."

The report can be found here.

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