The purpose of the Fuel Tax Credits Scheme is to remove the effect of fuel tax on business inputs to ensure that production decisions are not distorted. Like the GST system, fuel tax credits simply ensure the end consumer pays the tax and in the case of excise, only for transport use of fuel on-road.
The way in which fuel tax credits are administered by the Australian Taxation Office may cause some to think of them as a subsidy because some money flows from the government back to business.
However the process whereby credits are claimed by businesses through the BAS was only introduced to improve administration.
The government switched to a rebate system because it’s more efficient to charge all users the same price upfront for fuel and have eligible users claim back the excess excise, than to have the complexity and integrity issues involved in a certificate system in which eligible users aren’t charged excise at the pump.
“Fuel tax credits are not a subsidy for fuel use, but a mechanism to reduce or remove the incidence of excise or duty levied on the fuel used by business off road or in heavy on road vehicles.”
Treasury, Submission to G20 Energy Experts Group
Major Australian industries that rely on off-road diesel
$7b Forest and wood products
myths and facts
Fuel tax credits are a “subsidy”
Excise is not tied directly to road funding, so off-road users should pay
Capping fuel tax credit claims would leave most diesel users unaffected
Fuel tax credits encourage the use of fossil fuels
Losing the fuel tax credits scheme would put extra pressure on families already facing rising business costs and stagnant farm gate prices.
Michael ChalmersFarmer, New South WalesView Story
We maintain the laneways to be as good as a gravel road, so we can drive at 100 km an hour to get things done quickly and safely.
David and Lyn SladeKendenup, Western AustraliaView Story