The Liberal Democrats have seized on rising petrol prices to hawk their so-called “alternative budget” in the lead-up to the federal election, with the conservative party pitching itself to voters as a low-tax crossbench alternative to The Greens.
Senator Duncan Spender, who stepped into the role in March after David Leyonhjelm resigned to unsuccessfully contest the NSW election, said the current fuel excise of 41.6 cents per litre was “ridiculously high”.
Including the GST, a “tax on tax”, the effective excise is closer to 46 cents per litre.
“Most of Australia right now would be less than $1 a litre fuel under the Liberal Democrats plan,” Mr Spender said. “It’s been a long time since people remember $1 fuel, you’d probably have to go back to the 20th century, but that’s what we should be paying.”
Around $8 billion of the fuel excise is returned to heavy vehicle businesses in rebates. That means abolishing fuel excise would be a net cost to the budget of $10 billion, an average tax cut of $400 for “every man, woman and child in Australia”.
“It’s a sore thumb tax that sticks out, it doesn’t really line up with the rest of the tax system,” he said. “We shouldn’t be paying this ad hoc tax on this particular item.”
Mr Spender said the Liberal Democrats had proposed federal government spending cuts of more than $200 billion, so “it’s just a choice of which of our tax cuts you’d say would be associated with this fuel tax plan”.
He proposes abolishing $11 billion a year in university subsidies to pay for it.
“We believe students should be able to get income-contingent loans so people of all backgrounds can go to university, but you should abolish the separate subsidies that go to universities,” he said.
“People who go to university earn $1 million more over their lifetime. The current subsidisation of universities basically involves poor people subsidising the people who will end up being the rich.”
Fuel excise, which increases in February in August each year, is “particularly regressive” because it punishes people living in regional areas and outer suburbs who commute long distances every day, and who are often less well off.
Mark McKenzie, chief executive of the service station peak body the Australasian Convenience and Petroleum Marketers Association, said the industry had “no view either way” on the fuel excise.
“It may sound a bit odd, but we really don’t have a stake in fuel excise because we don’t retain any of it, we’re merely a collector, therefore any decision about the future of the excise is really a matter for the federal government,” he said.
“That said it’s important to note as we move to electric vehicles, that will progressively cannibalise the amount of excise collected to go to road funding. The key challenge for government is about preserving (that revenue) by transitioning away from wholesale excise to an alternative plan such as road user charging.”
Mr Leyonhjelm last year introduced a “lower-tax” bill to abolish fuel, alcohol and tobacco excise and introduce a uniform tax rate of 20 per cent and a tax-free threshold of $40,000.
The Liberal Democrats are running 11 Senate candidates including Mr Spender, who will break the record for shortest number of days to ever sit in the Upper House if he fails to win re-election.
“If I or other Liberal Democrats are elected to the Senate we will revive that legislation so it can be debated and we can see from the major parties what arguments they have against these ideas,” he said.
“Either way we need a non-Greens crossbench. We see ourselves as a potential reasonable voice on the Senate crossbench so the government doesn’t need to negotiate with a party that wants to increase taxes.”
Petrol prices are at the highest they have been for the past decade. We take a look into several reasons why this has happened.