Over the past year, inflation has delivered the government a tax windfall, because taxes like fuel excise go up with the inflation rate.
The tax on your petrol is now 48.8c per litre.
Since the Labor government was elected this rate has increased by over 4c, a 10 per cent rise.
This financial year the government is due to take in $6.4bn extra in petrol and diesel taxes than just two years ago.
Normally these taxes have broad political support because the revenue raised notionally goes towards building new roads and maintaining old roads.
Someone has to pay for roads, and it is fair that the motorists that use them help pay for them.
The Labor government is abusing that support now. They are raking in billions more from the increase in fuel excise while at the same time cutting funding for infrastructure.
If Labor is going to cut its spending on roads, then it is only fair that Aussies get a cut in fuel taxes to match.
Since last year Labor has already cut more than $9bn in infrastructure funding.
This week Labor’s Treasurer has flagged that more cuts may be on the way, saying that he had to make “difficult decisions about the infrastructure pipeline”.
Why should Labor get to increase taxes on petrol while spending less on roads?
If the government is going to cut infrastructure spending, then it is only fair that it helps cut the cost of living for families by reducing the fuel excise rate too.
If the government is to announce further cuts in infrastructure funding it should match that with a reduction in taxes on petrol and diesel.
The savings for an average family from a cut in petrol taxes could make a real difference. Even if the government simply returns the infrastructure cuts it has made to date, that would fund a halving of the fuel excise rate for the next year (with some change left over).
A halving in the fuel excise rate for a year would save the average Australian family that has at least one car $600.
And the relief could be even higher, or extended for longer, if the government announced further cuts to infrastructure funding.
Some will argue that fuel excise is not directly linked with road funding. However, it was until 1992 and even since then there has been a strong link between funding of roads and the amount the tax has raised.
Taxes on fuel will never be popular but people will broadly accept them if they can see that the revenue is going to fund better roads.
Instead, the government’s tax windfalls have been going to fund unsustainable increases in welfare spending.
In its budget this year the government increased welfare spending by $38bn over the forward estimates.
It was by far and away the biggest increase for any spending category. The next biggest was health with a $10bn increase.
Australians could cop an increase in fuel taxes if it was going to fund the upkeep and improvement of their roads.
But why should families who are struggling to keep enough petrol in the tank to take their children to school be asked to pay more taxes to fund increased welfare spending?
This week’s announcement of another interest rate rise is another crushing blow for Australian families many of whom have already had to find an extra $1000 or more a month for mortgage payments over the past year.
The Labor government is complicit in the interest rate increase because its runaway spending on welfare has not helped bring inflation down.
At least the interest rate decision seems to have shocked the Treasurer into accepting that government spending has to fall.
But if Labor is to cut spending on infrastructure the least it could do would be to return some of its windfall on petrol taxes to help those Australians struggling with the impact of Labor’s ill-discipline on government spending.
