The Australian Trucking Association has urged the Australian Government to reject a recommendation from the Productivity Commission that would phase out fuel tax credits for trucking operators, warning it would increase freight costs and place further financial pressure on the industry.
The recommendation was included in the Commission’s final report on Australia’s net zero transformation and would increase the effective fuel tax paid by trucking operators by 19.2 cents per litre based on current rates.
ATA Chair Mark Parry said the fuel tax credit system plays a critical role in keeping freight costs down for businesses, consumers and exporters.
“Trucking businesses pay an effective fuel tax rate of 32.4 cents per litre, rather than 51.6 cents, because otherwise end users would pay tax on the fuel twice – once through the cost of the fuel excise and once through the GST,” Mr Parry said.
He said the fuel tax paid by trucking operators is calculated as a road user charge intended to cover the industry’s use of the road network, noting that this charge has already increased significantly.
“The amount we pay has increased 19 per cent over the last three years, with transport ministers considering another 6 per cent increase for 2026-27,” he said.
Mr Parry said trucking businesses are already facing sustained financial pressure from rising operating costs, extended payment terms, workforce shortages and natural disasters.
“The Productivity Commission’s idea that they should pay more tax would cause more businesses to fail before costs inevitably rise across the economy,” he said.
The Commission argues that abolishing fuel tax credits would help “incentivise all decarbonisation pathways”, a claim Mr Parry disputed.
“In our cities and nearby areas, the most important barrier to firms using battery electric trucks is their upfront cost. Changing the tax on fuel would do nothing to address this barrier, unlike the voucher scheme that the ATA proposed,” he said.
He also said there are currently no commercially viable alternatives to diesel for many heavy transport tasks.
“Linehaul, remote and heavy haulage businesses do not have a commercially available alternative to diesel. Although renewable diesel is an emerging option, the commission’s proposal would tax renewable diesel at the same rate as conventional diesel,” Mr Parry said.
“The commission’s recommendation would not encourage businesses to use low emission vehicles or renewable fuel. It would make trucking businesses less viable and ultimately increase freight costs across the economy,” he said.
