Industry Issues

Budget Caution is Advised

budget caution is advised

Amid all of the hype which surrounds the announcement of the details of any Federal Budget, the hype around this one, on the eve of an election campaign, means budget caution is advised.

The topic of rapidly rises fuel prices has been front of mind for many trucking operators since the start of the Russian invasion of Ukraine. Those with fuel levies in place with customers would have double checked the details of any levy and those without a fuel levy in place would have begun a conversation with customers about the issue.

The arrival of the budget and the announcement, by the Treasurer, Josh Frydenberg, that the fuel excise was to cut in half for six months was the headline on the TV news, but the trucking industry should not be taking the hype at face value.

The cut is not all it seems, when you add in the complications of the Road User Charge (RUC) and Fuel Tax Credits (FTC), the regular rebate on each BAS is set to disappear for six months. 

A graphic created by the Queensland Trucking Association illustrating the issue.

As the Fuel Excise explainer put out by Treasury explains:

“The Government is not changing the existing RUC arrangements for heavy vehicles travelling on public roads, but the temporary reduction in fuel excise will provide a net benefit for heavy vehicle operators of 4.3 cents per litre from 30 March, compared to current settings. 

“This is because the RUC is currently 26.4 cents per litre of fuel used and, from 30 March 2022, the excise paid by heavy vehicles will be 22.1 cents per litre, which is less than the RUC. The FTC for heavy vehicles on public roads will reduce to nil.”

Reducing the FTC to zero may have implications for operator cash flow, with the rebate, which normally eases the pain of payments to the Australian Tax Office, disappearing for half a year.

“While there were some good announcements for small to medium business, the halving of the fuel excise tax for six months did not hit the mark for members,” said Warren Clark, NatRoad CEO, in his commentary on the budget.

“The measure will bring down prices for motorists, but the net benefit for most heavy vehicles will only be a reduction of 4.3 cents per litre, according to Treasury’s own fact sheet. This is because of the complex nature of the way heavy vehicle operators are taxed.”

budget caution is advised

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