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Rising cost of living throws spotlight on tax reform for Australian motorists

Recent focus on the rising cost of living in Australia has reinvigorated debate on the fuel excise. This presents an unprecedented opportunity to scrap ineffective and antiquated taxes on Australian motorists.

The FCAI, the peak body for Australia’s automotive industry, believes now is the perfect time for policy makers to seriously examine the merits of a broad-based road user charge scheme which would replace a range of outdated and inefficient charges.

The FCAI released a comprehensive discussion paper on the Road User Charge concept in May 2021. The full paper is available here.

FCAI Chief Executive Tony Weber said the transition to road user charging was a progressive step in national tax reform and under current conditions, Governments now have an unprecedented opportunity to scrap ineffective and antiquated taxes on Australian motorists.

“Since the release of the FCAI’s discussion paper on road user charging, some State Governments have announced plans to introduce a road user charge for the owners of electric vehicles as part of their zero emission strategies. Our view is that Governments can take this further and apply a road user charge to all vehicles, regardless of their engine type.

“Importantly, a road user charge is not an additional tax on motorists. Instead, it can replace a myriad of charges such as registration, fuel excise licence fees, luxury car tax and sales tax. The reduction in complexity also presents an opportunity to reduce the large bureaucracies required to administer these inefficient taxes and charges, providing additional economic benefit.”

“State and Territory Governments are beginning to adapt to the changing nature of mobility in Australia, including the rise of electric vehicles that do not pay fuel excise. Applying RUC more broadly and scrapping taxes like fuel excise and the luxury car tax will ensure that all motorists are paying an equitable amount to use Australia’s road network,” Mr Weber said.

“The discussion paper released by the FCAI outlines the opportunities and pathways that are available to Governments for this type of taxation reform. Clearly the details need to be carefully considered to ensure any scheme considers the application of equity for motorists across the country. This is particularly important when considering rural and regional travel, the Australian lifestyle and our tyranny of distance.”

Mr Weber added that automotive manufacturers want to work alongside Governments that have the courage and foresight to address this issue.

“We need this reform to move Australia’s road tax system from last century and ready it for the future of motoring. Australians want a future that can provide clarity, simplicity, fairness and value to their wallet. There is no better time than now to bring this future into reality.”