The Conversation hosts a debate between Richard Denniss and myself on the fuel rebate.
We each had about 600 words to make an argument for and against abolishing the rebate. It was quite a challenge and I think Richard and I have summarized each side of the debate pretty well.
The fuel tax credit scheme is a subsidy that will shortly pass A$6 billion per year. Fuel excise has nothing to do with road construction and there are very good economic reasons for taxing diesel use. It’s time that this privileged group of businesses be taxed the same as everyone else.
But is the rebate really an industry subsidy? Not according to the people who know best: the government, the Treasury, or the Productivity Commission. Even Chris Riedy in a 2007 Greenpeace Australia Pacific Report agrees the rebate is not a subsidy.
It is true that there is nothing to force our politicians to actually spend the money on roads. This is just another in a long, long line of broken promises. The fact is that section 81 of the Constitution requires all revenue to be paid into one Consolidated Revenue Fund – as such, hypothecated taxes constitute political fiction and fiscal illusion.
Please click through and read the whole thing.