Industry takes aim at breaches of government fuel tax policy

The tax burden on Australian gaseous fuels continues to exceed that promised for alternative transport fuels by the Federal Government, and is denying Australians myriad benefits from using these fuels, Gas Energy Australia CEO Mike Carmody has said.

Lodging a submission to Treasury in response to the Tax Discussion Paper, Mr Carmody said the policy commitment is being breached, eroding the economic and environmental advantages of using cleaner, cheaper, Australian gaseous fuels instead of imported petrol or diesel.

“It’s not hard to see why Australia’s natural gas and LPG vehicle fleets have been declining since 2011, instead of growing as is the case globally,” he said.

“The tax burdens on LNG and CNG used in heavy trucking on an energy equivalent basis are 59 per cent and 64.5 per cent respectively of that applying to diesel – well short of the bi-partisan commitment to provide a 50 per cent discount for alternative transport fuels.

“And these tax burdens on LNG and CNG are set to increase to 73.9 per cent and 80.8 per cent respectively of that applying to diesel, following scheduled excise increases this year and if the Government accepts the National Transport Commission’s recommended increase in the Road User Charge. Also, while
the tax burden on LPG used in light vehicles is likely to stay within the 50 per cent discount, increasingly competitive electric vehicles pay no fuel tax.”

The 2011 Green Truck Partnership trial in Sydney estimated the economic advantage of a CNG powered spark ignition concrete truck over diesel to be 7.32 cents/km. Excise impositions on transport CNG since then have turned this advantage into a disadvantage of 5.98 cents/km as at 2 February 2015.

Mr Carmody said undermining the cost benefit of gas in this way acts as a major disincentive to use the Australian fuel, despite the fact that gas powered vehicles produce up to 23 per cent less greenhouse gas emissions than their petrol and diesel powered counterparts, as well as greatly reduced levels of dangerous particulate pollution.

“We have asked the Government to stop stifling the uptake of Australian gas as a transport fuel by reducing the relative tax burden to meet the 50 per cent discount promised,” he said.

“This will allow greater displacement of more polluting, foreign fuel and, in doing so, improve our nation’s energy security.”

Gas Energy Australia’s submission to Federal Treasury on the Tax Discussion Paper is available here.

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