Small business concern over fuel price hike as government bypasses Senate on petrol excise

The federal government has announced it is using tariff proposals to reintroduce the twice-yearly indexation of the fuel tax in order to circumvent the Senate, with the move raising concerns in some sections of the small business community.

TheAustralian Financial Review reports the government will still need to pass legislation within 12 months, or it will be forced to hand back money raised by the tax increase. If that happens, the government says taxes will be handed back to the oil companies rather than consumers.

In a statement issued this morning, acting Assistant Treasurer Mathias Cormann attempted to hose down fears, fanned by opposition finance spokesman Tony Burke, that independent service stations would be forced to collect the additional tax.

“Fuel excise is paid by fuel manufacturers and fuel duty is paid by fuel importers,” Cormann said.

“The revised implementation arrangements we announced yesterday don’t change this in any way shape or form.”

However, COSBOA chief executive Peter Strong told SmartCompany the reintroduction of indexation is likely to affect small businesses in other areas, in particular transport companies and small couriers.

He suggests it might be worth the federal government creating a calculator where business owners and managers can work out what their additional expenses are likely to be with indexation.

“My concern is for our members in the transport sector. If indexation is reintroduced they’ll need to pass on costs, but will they be able to do that with Coles and Woolworths?”

Meanwhile, Mark Chapman, head of tax with lobby group Taxpayers Australia, says while the federal government was within its rights to reintroduce indexation, it has handled the issue poorly.

“We don’t have an objection to fuel indexation per se, it’s reasonable. What we have an objection to is how it’s been handled. If the government had intended to do this, they should have raised it before the last election.

“At the very least, they should have introduced it through both houses of parliament.”

Chapman explains it is likely most of the legislation that had previously allowed indexation to occur prior to 2001 is still in place.

“The argument is that because this is a tax that already exists, and has been indexed in the past, the government can reintroduce indexation. That is probably legally correct, but it’s politically inappropriate,” he says.

In a recent doorstop interview, Opposition Leader Bill Shorten said he remains steadfastly opposed to any indexation of the fuel excise.

“Before the election, the night before on SBS he does this big TV interview, ‘I’m not going to increase taxes, no new taxes’, then he increases the tax on petrol. We were never going to vote for that. A crocodile wouldn’t swallow his nonsense,” Shorten said.

Meanwhile, when the federal budget was delivered in May, Greens leader Christine Milne initially supported the move to reintroduce indexation on petrol excise, which had been scrapped by the Howard government in 2001.

The party’s position later changed, with Milne citing the federal government’s decision to use funds generated through the tax on new roads rather than public transport.

However, the latest news has prompted another shift in the Green’s position, with the party now saying it will “examine the government’s legislation when it is released”.

Follow SmartCompany on Facebook, LinkedIn and Twitter.