Fuel tax credits to return

Finance Minister Katy Gallagher initially deliberated when asked whether the federal government would reinstate fuel tax credits.

Labor government 'knows' end of fuel excise cut will ‘hurt households’

Fuel tax credits will be reinstated in full from Thursday, ending months of uncertainty for farmers and trucking companies.

Finance Minister Katy Gallagher confirmed the federal government’s commitment to the divisive scheme late on Tuesday, despite equivocating when asked repeatedly by Nationals Senator Bridget McKenzie in the Senate on Monday whether FTC would be reinstated when the six-month halving of the fuel excise came to an end.

Finance Minister Katy Gallagher is at pains to point out that Budget is under pressure from many competing interests. PICTURE: NCA NEWSWIRE/GARY RAMAGE

Earlier in the year there were fears independent senators would push the Albanese government to end the scheme that had been labelled a tax break for heavy polluting industries in return for their support for Labor’s Climate Change Bill.

National Farmers’ Federation president Fiona Simson said reinstating the credit would bring relief to farmers and transport operators left in the lurch when FTCs disappeared in March. But she called for credits to be back-paid to March, when the fuel excise was halved.

“We advocated to the previous government and the new government to get a fair resolution on this, and we’re frustrated that no action was taken earlier,” Ms Simson said.

“Credits should now be paid on any fuel purchased in the Q1 BAS period, to help make up for the short-changing that occurred in March. We’ll seek to clarify this with the government. We know the cashflow headache this created for fuel users and it’s important that the government now right this wrongdoing in full.”

In Australia, fuel tax is offset by fuel tax credits for business users of fuel so they’re not taxed on fuel used as a business input.

After the excise was halved from 44.2 cents to 22.1 cents in March, the Australian Taxation Office wound back the FTC to zero, leaving all heavy vehicle operators on public roads to pay the fuel excise of 22.1 cents on every litre of diesel they use.

National Road Freighters Association president Rod Hanifey said the reinstatement of FTC would bring an end to a dire half-year for the industry, when many operators were unexpectedly left thousands of dollars worse off.

“It has forced some people to the wall. The damage is done,” Mr Hanifey said.

He said the abrupt change left the freight industry’s customers confused, with many thinking they would benefit from the full 22.1 cent excise cut, and he criticised the Morrison Government for obfuscating the details.

“When they said they were dropping the fuel excise 22c a litre, the public thought it was fantastic, but that reduced the road transport industry’s tax credit, so we only got a 4.5c/L drop. This was all hidden in the details.”