Fed: ACF pushes for end of fuel subsidies

AAP General News (Australia)
04-09-2008
Fed: ACF pushes for end of fuel subsidies

By Peter Williams

CANBERRA, April 9 AAP - The Australian Conservation Foundation (ACF) has called on
the federal government to remove $7.8 billion worth of fuel subsidies in next month's
budget.

The ACF wants Treasurer Wayne Swan to get rid of tax breaks for industry diesel use,
company cars and aviation fuel in order to discourage greenhouse pollution.

Other environment groups have made similar demands in the lead-up to the budget.

ACF executive director Don Henry today said the Fuel Tax Credits scheme cost taxpayers
$4.9 billion in 2006-07, or $230 for each Australian, a 38 per cent increase on the previous
year.

Most of the money subsidised the diesel fuel costs of big mining, forestry and transport
companies, Dr Henry said.

He said mining companies alone claimed $1.2 billion in fuel tax credits in 2005-06,
according to the Australian Tax Office.

"The truth is, the profitable mining sector does not need your or my taxpayers' dollars
to continue to thrive," Mr Henry told the National Press Club in Canberra.

"In fact, this billion-dollar handout is probably discouraging the industry from implementing
energy efficiency measures that would cut greenhouse pollution."

He said from July the tax breaks will be extended to more business operations, and
in 2012 all off-road use of fuel will become exempt.

On company cars, Mr Henry said the federal Treasury has predicted their fringe benefits
tax concession would cost more than $2 billion a year by 2009-10.

Company cars accounted for an estimated 18 per cent of all road trips, the equivalent
of 7.9 million tonnes of pollution, he said.

The ACF says the aviation subsidy allows airlines to pay three cents a litre in fuel
tax compared with $38 a year for the average motorist, costing a Treasury-estimated $900
million a year.

Removing the tax break would only cost an airline passenger about $12 extra for a typical
domestic flight, the group has calculated.

Mr Henry said he was under no illusion that the Rudd government would act on ACF's
recommendations any more than its coalition predecessor.

"We have a lot more access to this government, but I'm not foolish enough to equate
access with results."

Oil company Caltex Australia said the fuel tax credit was not a subsidy but a rebate
which made industries competitive.

"Undoubtedly, if you applied a very high rate of tax it would drive some change (in
fuel consumption) but at the same time would probably do considerable damage to the Australian
economy," Caltex spokesman Frank Topham said.

"If those deductions were not there, the cost of all goods would be higher because
of the additional imposts on road freight (and) we'd have less employment and economic
growth."

The Minerals Council of Australia said diesel was a "major and necessary" business
input to the mining industry.

"It is a long standing principle that we don't tax business inputs," the council's
director of industry economics and taxation David Rynne said.

Both Mr Topham and Mr Rynne supported the 2010 introduction of a carbon price through
emissions trading as the most effective measure to cut pollution.

AAP pw/sb/goc/nf

KEYWORD: BUDGET ACF NIGHTLEAD

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