Logistics News

Transport costs to rise under carbon tax

While small businesses get a break from higher fuel prices under a carbon tax, transport costs will rise

By <a href="mailto:bgardner@acpmagazines.com.au“>Brad Gardner |
July 4, 2011

Small businesses will
earn a break from higher fuel prices when a carbon tax is introduced, but transport costs could rise.

Prime Minister Julia Gillard yesterday announced a carbon tax would not apply to fuel for families, tradesman and small businesses.

Climate Change Minister Greg Combet today confirmed it would apply to small businesses with light commercial vehicles, prompting anger from the trucking lobby which believes the exemption should apply to operators and owner-drivers.

The Australian Trucking Association (ATA) says there is no equality in exempting select groups and is opposed to a dual system proposed by the government.

“The government should exempt trucks from the carbon tax as well as cars, or impose the tax on all fuel users, not come up with an ad hoc arrangement to include some and exclude others,” ATA CEO Stuart St Clair says.

He says trucking firms will pass on the increased cost of fuel, in turn affecting the price of supermarket goods and exports.

While the government has refused to release further details on how its selective policy will work, the ATA believes the fuel tax credit will be reduced for businesses using vehicles over 4.5 tonnes.

“The only way to do it is to adjust the fuel tax credit rate,” ATA Government Relations Manager Bill McKinley says.

The ATA fears small fleet operators and owner-drivers lacking the leverage of their larger counterparts will struggle to pass on costs.

“They are already finding it difficult to recover fuel price increases from their customers. They would go out of business,” St Clair says.

A study by the Centre of International Economics released last week found that the price of diesel would increase by 7 cents a litre under a $25 carbon tax. The figure rises to 8 cents for a $30 price.

The Federal Government is tipped to introduce a price of between $20 and $30 a tonne.

The study, commissioned by the ATA, says fuel increases from a carbon tax are unlikely to differ beyond the price fluctuations the trucking industry currently deals with.

“Therefore, while the imposition of a carbon price on diesel fuels will be an additional cost to the industry, it should not be outside of the scale of price increases that are observed through the market,” the study says.

The Transport Workers Union (TWU) today staged a media conference calling on Gillard to make sure owner-drivers and employee drivers are exempted from an increase in fuel.

During an interview with radio talkback host Neil Mitchell today, Combet told listeners the government would take a “fair approach” to the final carbon tax package expected to be announced in days.

“We can confirm that motorists, households, small business people with light commercial vehicles won’t be paying anything else at the petrol bowser when a carbon price comes in,” he says.

Combet also criticised the Greens for yesterday claiming they secured a Productivity Commission inquiry into the fuel excise in return for their support in exempting motorists from a carbon tax.

“It’s not for the Greens to be announcing anything,” Combet says.

Greens Senator Christine Milne says the Productivity Commission inquiry will focus on moving to a system of taxing fuel based on their carbon and energy content.

“In particular, we should change the fuel excise regime from a simple revenue-raiser into a real driver for change, taxing more polluting fuels more and cleaner fuels less,” she says.

“The mish-mash of policies which sees subsidies and taxes working against each other needs to be changed.”

During a recent Senate debate on the alternative fuels legislation, Milne argued for a new taxation scheme to be phased in.

She says the fuel excise could be scrapped in the long-term as motorists switch to electric vehicles.

“At the same time you would need to phase in a road user charge, because with electrification of the transport fleet and renewable energy there will come a point when people are not paying fuel excise but using the road system,” Milne says.

The carbon tax is due to begin on July 1, 2012, meaning transport operators could face a double whammy because the fuel tax credit will be reduced on that date to account for government expenditure on the road network.

The latest annual adjustment, which coincided with a 2.4 percent increase to heavy vehicle registration charges, reduced the credit from 15.5 cents to 15 cents a litre on July 1.

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