FALLING revenue from vehicle use and the resulting diminished revenue for federal and state governments has been one of the drivers behind the FCAI’s call for a radical overhaul of Australia’s tax system.

In its discussion paper, released this week, the Federal Chamber of Automotive Industries (FCAI) said: “Automotive-related revenue and particularly fuel excise is reducing per vehicle resulting in a diminishing source of revenue with which to fund, amongst other priorities, road transport infrastructure and maintenance.”

“This is being exacerbated by increasingly fuel-efficient vehicles as well as the progressive electrification of the light vehicle fleet.”

FCAI chief executive Tony Weber said there were many automotive-related taxes and charges at most levels of government “that are inefficient and, in many cases, dampen consumption whilst not being relative to the usage of the vehicles and the impact on the infrastructure that they utilise.”

“It is these developments that provide governments with a considerable opportunity to harness and combine the advantages of a number of these megatrends,” the discussion paper said.

It nominated issues that need addressing, including:

• Commencing the phasing out of fuel excise with the introduction of road user charging across all vehicles regardless of powertrain choice
• Addressing traffic congestion in the key inner-city areas by introducing congestion charging which could be introduced in several ways; Gantry-style using e-tags and/or Automatic Number Plate Recognition (ANPR) cameras
• Addressing traffic congestion by using pricing controls that encourage consumer behaviour to make considered choices in areas of high demand particularly during peak periods.

It said that reducing traffic congestion would lead to benefits including:

• Lower concentrated and localised emissions
• Lower noise pollution
• Improved road safety
• Reduced death and trauma on Australian roads through reduced congestion
• Reduced health and associated costs resulting from road death and trauma
• Improved traffic flow across the city
• Simplified and automated taxation revenue generation.

But the FCAI said the proposal will bring challenges. These include:

• Introducing a road user charging system would require a great deal of cooperation and coordination between all levels of government. However, it will progressively result in a stable, reliable and increasing revenue stream with market expansion over time that could be beneficial to consumers as well as to all governments
• From a government perspective there is significant opportunity to reduce a range of inefficient federal and state taxes and charges along with the administration reduction and associated cost savings that will result – this could provide the win-win solution
• From a consumer perspective there is a need to create benefits from this change otherwise this will be seen as a new tax on technology – which may result in consumers avoiding the technology
• A nationally-consistent scheme would provide consumer confidence and administration simplicity leading to acceptance if applied appropriately and equitably.

The FCAI said that in an overall context, there should be no reason why a well-designed road user charge could not achieve the following:

• Simplify and automate taxation
• Reduce congestion and improve road safety as a result
• Promote economic efficiency and as a result most people will pay no more; some light users will pay less; and city commuters could pay more. This will reduce congestion and allows the charge to become variable in the future according to demand, if congestion charging is introduced. In turn, cities will generally become more liveable so there will be health benefits for people in and around the major city centres
• Continue advancing the electrification of the fleet with associated emission reduction benefits by not selectively applying Road User Charges and dampening demand.

By Neil Dowling