Tony Abbott admits fuel tax will act like a carbon tax

TONY Abbott has admitted his controversial plan to hike fuel taxes will act like a carbon tax, raising revenue rather than fighting climate change.

Australia PM Tony Abbott meets with President Obama in the Oval Office of The White House. Picture: Jake Nowakowski

TONY Abbott has admitted his controversial plan to hike fuel taxes will act like a carbon tax.

Australian motorists already pay more than three times as much tax on fuel as Americans, Mr Abbott told US President Barack Obama in a discussion about climate change.

Mr Abbott later told News Corp Australia that the fuel tax was “at least on one level part of the price of carbon”.

He insisted the Budget measure was aimed at raising revenue rather than fighting climate change.

But he predicted it would have a significant impact on cutting carbon emissions.

“We’ve long put a price on fuel. We have used tax as putting a price on fuel,” Mr Abbott told News Corp Australia.

“Indexing the fuel excise is a revenue measure but it obviously also has the impact over time of significantly increasing the tax on fuel.”

Australians currently pay about $1.50 a gallon in fuel tax compared to 44 cents paid by motorists in the US, Mr Abbott said.

“This is at least at one level part of the price of carbon,” he said.

Opposition Leader Bill Shorten attacked the comments yesterday, saying Mr Abbott needed to explain his reasons behind the planned fuel excise hikes.

“Does he think that he’s putting this tax on petrol as some sort of carbon price or carbon tax?,” Mr Shorten said.

Getting down to business ... Australian Prime Minister Tony Abbott meets with President Obama in the Oval Office of The White House. Picture: Jake Nowakowski

“I think Mr Abbott needs to clarify his remarks pretty quickly.”

Climate change is the most obvious point of difference on policy between Mr Abbott and Mr Obama.

The US President wants a new global deal for a carbon price and has set targets for cutting emissions from US power stations.

But Mr Abbott plans to scrap the carbon tax and introduce a $2.5 billion “direct action” plan that includes planting trees and paying companies to cut emissions.

The PM confirmed to News Corp that the President explicitly recognised that he had a mandate to roll back the carbon tax.

“He obviously follows politics in Australia very closely,” Mr Abbott said.

“He appreciates as a democratic politician that if you’ve got policy you’re expected to adhere to it.”

Strong allies ... Tony Abbott meets with President Obama in the Oval Office of The White House. Picture: Jake Nowakowski

In their first formal meeting in the White House, Mr Obama said he wanted energy efficiency and climate change high on the agenda of the G20 leaders’ summit in Brisbane in November.

Mr Abbott played down his differences with Mr Obama, praising him as “a charismatic” and “at times inspirational figure”.

But his glowing public comments contrast with the scathing private view of some of his closest advisers that Mr Obama is a “lame duck” President who does not believe in anything.

Mr Abbott rejected suggestions that Mr Obama would not be able to influence the global agenda on climate change as he edged closer to the end of his final term in office in 2016.

“The US president is the nearest thing to a global leader that exists and thank God we have in the US president someone who is normally prepared and able to exercise global leadership,” Mr Abbott said.

Originally published as Tony Abbott admits fuel tax will act like a carbon tax