Post on 12-Jan-2016
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AUSTRALIAN PERSPECTIVE OF TRANSPORTATION AND TAXATION:A RELATIONSHIP BUT NO MARRIAGE
PRAFULA PEARCE, LECTURER, SCHOOL OF BUSINESS LAW & TAXATION, CURTIN UNIVERSITY
INTRODUCTION
Is there a relationship between transportation and tax policy in Australia
Is a change in tax policy required to promote the use of more fuel efficient vehicles and reduce its use?
OUTLINE
Liquid fuel problemAustralian transport policy and growth of private vehicles
Australian tax policy and its influence on transportation choices
Tax policy changeProposed Luxury Energy Tax
LIQUID FUEL PROBLEMOIL RESERVES REPORTED FROM SELECTED AGENCIES
NAME OF REPORTING AGENCY
TIMING BILLION BARRELS (Gb)
Oil and Gas Journal Jan 2009 1342
World Oil Year end 2007 1184
EIA 2008 1241
BP Statistical Review June 2009 1258
ABARE End of 2008 1408
Source: Owen, Inderwildi & King (2010)
ABARE: World – 42 years of proven oil reservesAustralia: 10 years of crude oil; 31 years of condensate and 20 years of LPG
AUSTRALIAN TRANSPORT POLICY
Transportation falls within the jurisdiction of States.
Feb 2008: Australian transport Council Ministers – National transport policy framework.
Objectives: Promote efficient and sustainable movement of people and goods; minimise emissions and consumption of resources and energy
REGISTERED CARS AND STATION WAGONS
TRAVEL TO WORK OR STUDY
CARS: POWER AND WEIGHTCar Model Year Engine
Litres
Power/
Weight KW/tonne
Performance
0/100km
Holden FX Nov 1948 2.15 45/1012=
44.46
20
Holden HD
Feb 1965 2.45 86/1216=
70.72
13.2
Holden HJ July 1974 3.3 96/1338=
71.75
13.1
Holden VL Mar 1986 3.00 114/1250=
91.20
7.04
Holden VE July 2008 3.6 180/1700=
105.88
8.6
AUSTRALIAN TAX POLICY
AUSTRALIAN TAX REVENUES 2009/10
Australia’s future tax system: Final Report: Overview
CALTAX PETROL PRICE AT 12 JUNE 2009
IMPACT OF CURRENT TAXES ON FUEL CONSUMPTION BY MOTORISTS
PRRT and Crude oil excise: Tax on profits – no impact on motorists
Fuel Excise: Inelastic – use declines1.5% with 10% increase in fuel price.
FBT: Statutory formula imposes less tax with more driving
LCT: Tax based on cost of car, not consumption of fuel
HENRY REVIEW RECOMMENDATIONS
Abolish LCT Replace vehicle registration tax with
road user charge Introduce congestion tax Recommendations will promote
national transportation policy.
TAX POLICY CHANGE-OTHER COUNTRIES
UK and Ireland: Car purchase taxes based on CO2 emissions
Netherlands: Introduced charge per km driven tax starting in 2012 starting at 3 Euro per km. Use GPS device.
Oregon: Process of developing road user fee. Task Force in 2001 recommended road user fee and congestion charge using fuel pump station to collect the charge using vehicle detection device and central reader.
LUXURY ENERGY TAX (LET)
My recommendation: Introduce Luxury Energy Tax imposed on purchase and use based on power and weight of vehicle.
It has the potential to include road user charge and congestion tax.
Will bring about education that energy is a luxury.
It has potential to change motor manufacturer and buyer’s habits to seek lower power to weight vehicles.
PRINCIPLES OF LET
LET charged to registered owner of vehicle at 4 levels:- Initial purchase- Annual registration- Fuelling - Maintenance and insurance
Vehicles attract points based on: Weight; Engine capacity; Power and CO2 emissions.
Points are converted to tax units. LET = Tax units x Tax rate
POINTS WEIGHT(KG)
CAPACITY(CC)
POWER(KW)
CO2 EMISSIONS(g/km)
0 600 600 40 80
1 700 850 50 90
2 800 1100 60 100
3 900 1350 70 110
4 1000 1600 80 120
5 1100 1850 90 130
6 1200 2050 100 140
7 1275 2250 110 150
8 1350 2450 120 155
9 1425 2650 130 160
10 1500 2850 140 165
11 1550 3000 150 170
12 1600 3150 160 175
13 1650 3300 165 180
14 1700 3450 170 185
15 1750 3600 175 190
16 1800 3700 180 195
17 1850 3800 185 200
18 1900 3900 190 215
19 1950 3950 195 220
20 2000 4000 200 225
CALCULATION OF POINTS TO DETERMINE LUXURY ENERGY TAX UNITS
HOLDEN EPIKA
Specifications Points
Weight 1499kg 10
Capacity 2500cc 9
Power 115KW 8
CO2 emissions 221g 20
Total 47
Imposition of Tax
Tax Units per Point
HoldenEpika (47)
Initial new purchase of vehicle
1000 tax units 47000
Road Registration
100 tax units 4700
Fuel Consumption per litre
0.2 tax units 9.4
Maintenance per $100 spent
10 tax units 470
TAXING POINTS CONVERTED TO TAX UNITS FOR IMPOSITION OF LUXURY ENERGY TAX
Year Value per tax unit set by Government
$
Holden EpikaInitial Purchase
$
RoadRegistration
$
FuelPer litre
$
MaintenancePer $100
$
1 0.01 470 47 0.094 4.702 0.02 940 94 0.188 9.403 0.03 1410 141 0.282 14.14 0.04 1880 188 0.376 18.805 0.05 2350 235 0.47 23.506 0.15 7050 705 1.41 70.507 0.25 11750 1175 2.35 117.508 0.5 23500 2350 4.70 235.009 0.75 35250 3525 7.05 352.5010 1 47000 4700 9.40 470.00
DEMONSTRATION OF LUXURY ENERGY TAX FOR HOLDEN EPIKA
ADMINISTRATIONLET section through current
licensing departmentSmart debit card – prepayments of
units requiredRegistered Vehicles: LET registration
numberAll vehicles to be fitted with monitor
that identifies car ignition system and fuel tank
The fuel pump at petrol stations have vehicle and card reading devices
IMPACT
Centralised system with authorised agents permitted to debit smart card.
Agents=car dealers; licensing offices; insurance companies; repairers; pump stations.
Exemptions Effect: On purchasing, use and
maintenance of vehicle System can be extended to user
charges and congestion tax
ATTRIBUTES
Raise awareness that liquid fuel is a luxury Influence purchase of sustainable cars Raise revenue at four levels Encourage reduced driving and reduced
emissions Ease of payment by consumer using debit card Ease of collection by nominated agencies Easy to administer Low cost of administration Minimal evasion potential Protection of privacy and fair and transparent
CONCLUSION
Since Ford’s invention of constant moving assembly line, vehicles have become bigger and more powerful. Are they sustainable?
The current Australian tax policy does not promote the transportation policy.
The Australian Government should take the lead in implementing transportation taxes such as LET with synchronised user charges and congestion tax to promote efficient movement of people and goods with the least amount of liquid fuel.