Tax on fuel should be higher

[Dave_au]

.... at least thats what economists say

From SMH http://www.smh.com.au/news/business/...724580202.html

Originally Posted by SMH

Petrol taxes too low, say economists
By Jessica Irvine and Matt Wade
June 28, 2005

Economists have criticised calls for a reduction in the Federal Government's petrol excise, despite petrol prices being tipped to reach $1.20 a litre.

Some economists have advocated reintroducing petrol excise indexation to inflation, removed in 2001, which would increase the tax on fuel.

Motoring groups have called for cuts to the petrol excise, saying driving cars should not be seen as a luxury. The federal Opposition Leader, Kim Beazley, has called on the Government to ease the strain on motorists through bigger tax cuts.

A spokeswoman for the Treasurer, Peter Costello, said yesterday that petrol prices would be more than 14 cents higher without the Government's changes to the excise scheme.

Although prices at the bowser have been climbing, the level of petrol excise has been falling in real terms since 2001 when it was cut to 38 cents a litre and was no longer indexed to inflation.

The Government estimates it will reap $7.4 billion from petrol excise in 2005-06, $40 million more than this financial year, budget papers show. However, the elimination of petrol excise indexation means that income from this source is only expected to grow to $7.65 billion by 2008-09. Diesel excise is forecast to net $6.42 billion in 2005-06, $320 million more than this financial year.

According to figures from the International Energy Agency, in the December quarter Australia had the fourth-lowest petrol prices out of 29 members of the Organisation for Economic Co-operation and Development.

The tax on petrol in Australia is less than half that charged in Britain, Germany and France, though more than in the United States, Canada and Mexico.

Economists warned yesterday that cutting fuel tax could lead to an unsustainable reliance on an expensive non-renewable energy source and discourage the uptake of more energy-efficient methods of transport.

Commonwealth Bank's senior economist, Michael Workman, said with some forecasters tipping oil prices staying at record levels for the next two years, it was "perhaps time to look at the issue of indexation again".

ANZ Bank's chief economist, Saul Eslake, said: "I think the Australian Government went further than it should have when it removed the annual indexation. If other taxes, like the excise on cigarettes and alcoholic beverages, are indexed, what's special about petrol?"

Yesterday the global crude oil price hit fresh highs of $US60.47 a barrel in Asian trading.

Shell's average price for a litre of unleaded petrol in Sydney was 106.7 cents. Prices varied, reaching 112.9 cents a litre in the inner city and 109.9 cents in Parramatta. Northern and southern suburbs fared better, with petrol selling below the average at 105.5 cents in Ryde and 102.4 cents in Campbelltown.

"It's just something we've got to learn to live with," the National Australia Bank's chief markets economist, Rob Henderson, said.

Motorists had to change their behaviour in response to higher oil prices, Mr Workman said.

"If oil prices are going up, basically you should reduce your usage, try and move to other forms of energy with lower prices, or become more energy efficient."

The National Party yesterday called for a mandatory renewable fuels target to boost the use of ethanol as an alternative fuel.

Mr Workman said the move to ethanol was "something that should have happened years ago".

[TheSneakiness]

I was thinking about this on the way to work this morning. Even if the government abolishes the taxes they get, and just claim GST on each purchase, whether it be $5 for a $50 purchase, etc., they will still get plenty of revenue, just because there are so many people in Australia that drive cars.

[Dave_au]

and now for the other news:

Oil nears $US61 mark
Jun 28 08:18
AFP
http://afr.com/articles/2005/06/28/1119724606462.html

[whippet_zetec]

there is a sound economic basis for re-intoducing excise tax to petrol, however I am dead certain the economic argument means stuff all to all petrol consumers are really only worried about the price impact on their pocket.

[red_october]

It's easy for the economists to say that, but what about the car manufacturers and car users? What's the impact on them? What other alternatives are there besides public transport?

[merlin]

interesting - seems we are pretty well off when it comes to petrol prices compared to other countries (though the US has it better)