AAA denounces current taxation system

It's time motorists received a fairer deal for their tax dollars, the Australian Automobile Association (AAA) has declared in its submission to the Tax White Paper.

According to the AAA, state and federal governments earn $32 billion a year by taxing motorists in various ways. Previously the AAA has called for the abolition of the Luxury Car Tax, but in its official submission to the tax system review it has gone further.

"Our current taxation system embeds a growing disconnect between the way Australian roads are funded; and how they are paid for by motorists," says AAA Chief Executive Michael Bradley.

"Reforming transport pricing is a complex issue and one that will be politically challenging. However, it has to be tackled sooner, rather than later, as the current way Australians pay to use roads is unfair, inefficient, and no longer sustainable.

"Motorists are already paying a significant amount of tax to keep their cars on the road and they are not receiving a fair or transparent return for what they contribute each year," Bradley was quoted saying in a press release issued yesterday.

The AAA breaks the total impost paid by motorists down as follows: registration, licence fees, stamp duty and road tolls are paid to state governments around the nation, and GST on fuel, fuel excise, GST on vehicle sales, the Luxury Car Tax, imported vehicles duty and Fringe Benefits Tax are all payable to the federal government.

"Fuel excise alone raises $15 billion a year yet the return motorists get through investment in infrastructure has been historically low with only 47 per cent of fuel excise revenue returned to road building," says Bradley.

"An honest conversation about how to fund our future infrastructure needs is overdue.  Better roads will reduce congestion in our cities and deliver national productivity and economic growth. Increased infrastructure investment is also central to efforts to reducing the number of crashes, deaths and injuries that occur on our roads.

"Just as reform has improved the way consumers can pay for services in the communications and energy markets, the time has come for a serious conversation regarding how the same can happen for Australia's transport network."

The fuel excise levy has long been criticised for artificially raising the retail price of fuel, which is then subject to the double-dipping GST on top. It has to go, Bradley says.

"Fuel excise should be phased out as the primary source of revenue and replaced with a road user charge which would alleviate the regressive nature of the taxes on motorists and provide a clear link to the revenue raised and investment in infrastructure."

In short, the AAA wants to replace the fuel excise levy and ditch the customs duty and Luxury Car Tax.

"With no domestic vehicle manufacturing industry beyond 2017 there is no policy rationale to support the maintenance of these protectionist and inefficient taxes," Bradley concluded.

The full submission can be read on the AAA's website.

All submissions received for the white paper can be viewed on the government's Better Tax website.

Picture courtesy of Shultz6/Wikimedia Commons