- Media Release
Cost of living up, business tax payments down if Fuel Tax Credit rate cut
- New Parliamentary Budget Office report warns on consequences of changing FTC rate
- Reducing FTCs likely to result in higher consumer prices or lower business profits
A new report from the Parliamentary Budget Office has warned that the cost of living is likely to rise and business tax payments could drop if the rate of the Fuel Tax Credit (FTC) is reduced.
The findings confirm that activists calling for changes to the FTC are pushing a policy that would make life more expensive for Australians at a time when households and businesses are already under pressure.
Fuel Tax Credits refund a road tax on fuel that is not used on roads, supporting regional businesses which rely on off-road fuel to do essential work and create jobs.
The report – which models the effect of reducing the FTC by 25 per cent – notes that businesses could increase prices to offset the loss of FTCs which ‘could lead to higher consumer prices on the goods and services produced by some industries’.
It also states: ‘Assuming no other changes to the system, reducing FTCs would likely result in either increased consumer prices, when businesses pass the impact through the production chain, or reduced business profitability, for businesses that are unable to pass the impact on’.
The report adds that ‘less profitable businesses may offer lower shareholder returns and lower business tax payments.’
Through the Hands Off Our Fuel campaign launched this week, regional businesses have warned that Australian businesses already hit with rising costs would suffer further from the activist-driven push to cap or cut Fuel Tax Credits.
Any cap or restriction on fuel tax credits will introduce a new tax on regional and trade-exposed industries that do not use public roads including mining, agriculture, construction, fishing and tourism.
This would have flow-on effects on prices, jobs and investment in these industries and increase costs for the things Australians rely on every day, including food, freight, housing and local services.