The federal government must reject a Productivity Commission plan to hike the fuel tax paid by trucking operators and increase freight costs for everyone, the Australian Trucking Association demanded today.
Chair Mark Parry said the commission made the recommendation in its final report on the net zero transformation. The recommendation says that fuel tax credits for trucking operators should be phased out, which, on current figures, would increase the effective fuel tax they pay by 19.2c per litre.
Parry said the fuel tax credit system reduced freight costs for everyone in Australia, including exporters. “Trucking businesses pay an effective fuel tax rate of 32.4c per litre, rather than 51.6c, because otherwise end users would pay tax on the fuel twice – once through the cost of the fuel excise and once through the GST,” Parry claimed.
“The fuel tax we do pay is calculated as a road user charge with the aim of covering the cost of the industry’s use of the road system,” Parry said. “The amount we pay has increased 19% over the last three years, with transport ministers considering another 6% increase for 2026-27.”
Parry said trucking businesses faced intense financial pressure from rising costs, long payment terms, driver shortages and natural disasters. The Productivity Commission’s idea that they should pay more tax would cause more businesses to fail before costs inevitably rise across the economy.”
The commission’s report claims that abolishing fuel tax credits would ‘incentivise all decarbonisation pathways. But Parry said the commission was wrong.
“In our cities and nearby areas, the most important barrier to firms using battery electric trucks is their upfront cost. Changing the tax on fuel would do nothing to address this barrier, unlike the voucher scheme that the ATA proposed,” he said.
“Linehaul, remote and heavy haulage businesses do not have a commercially available alternative to diesel. Although renewable diesel is an emerging option, the commission’s proposal would tax renewable diesel at the same rate as conventional diesel.”
“The commission’s recommendation would not encourage businesses to use low-emission vehicles or renewable fuel. It would make trucking businesses less viable and ultimately increase freight costs across the economy,” he said.
