Delay in changing direction on how we tax drivers will cost us all
- Written by Marion Terrill, Transport Program Director, Grattan Institute
The federal government announced a year ago that it would review the charges imposed on drivers for using our roads. That review hasn’t yet happened. They should get on with it, because reforming the way we charge road users will make our economy more productive and our cities more liveable. The longer we wait, the harder the path to those improvements becomes.
The problem with the present system is that there is only a weak link between what motorists pay and the costs they create when they use roads. The amount motorists pay for registration, for example, does not vary with the amount of time they spend on the road, let alone how long they’re stuck in traffic jams.
Further reading: Road user charging belongs on the political agenda as the best answer for congestion management
But before we get to the benefits of reforming how drivers pay for the costs of their road use, we need to debunk a big myth about road funding in Australia. It’s one that has become a major distraction in discussions about the need for change.
The myth of the fuel excise crisis
Vehicle technology is improving. Cars are becoming more fuel-efficient, and powering them with electricity is becoming more mainstream. At the same time, our commuting patterns are changing – over the past few years, the average distance Australians travel by car has fallen.
This is worrying the government, which collects fuel excise from us every time we fill the car with petrol. Urban Infrastructure Minister Paul Fletcher has specifically raised concerns that:
…the revenue from fuel excise and car registration is unlikely to keep pace with the amount we spend as a nation on operating, maintaining and investing in roads.
The government’s key economic advisory body, the Productivity Commission, recently suggested reform of the fuel excise levy was “becoming more urgent”. But talk of a funding crisis is overblown.
First, the minister knows that the government doesn’t, and can’t, segregate revenue from road use to spend on roads. Federal spending on infrastructure is funded from general government revenue, the pool of funds received from the full range of federal taxes. As far as the government is concerned, road funding is just one of many expense programs claiming a piece of the budget pie.
As for revenue from the fuel excise, the decision in 2014 to reintroduce indexation will deliver much-needed relief for the government. The truth is, revenue did not fall much over the past decade and the levy now increases each year in line with inflation. The government may cry poor, but it can’t cry broke.
Authors: Marion Terrill, Transport Program Director, Grattan Institute
Read more http://theconversation.com/delay-in-changing-direction-on-how-we-tax-drivers-will-cost-us-all-87931