Petrol prices and tobacco excise

While the debate over plain packaging still has some way to go, I thought I’d open up a second front in the debate.

This morning the Herald Sun is reporting the results of a petrol price survey:

ONE in three Australian drivers admit there are days they can’t afford to buy petrol.
That’s one of the findings of a new study from customer research company Canstar Blue, which also found that 35 per cent of drivers will only fill up at the bowser if they have a discount voucher.

The research shows the financial strain that Aussie drivers are under — all at a time when the federal government plans to raise fuel taxes.

There is a lot more to this story than meets the eye.

First, for price conscious consumers the ACCC has moved to limit the value of the discount vouchers. We have covered this story quite extensively at the Cat since last December.

Second, the Abbott government plans to reintroduce petrol excise indexation. This policy was discontinued in 2001 due to voter anger following the introduction of the GST. More or less this compensated for the fact that GST and petrol excise interacted to generate a tax on a tax. Just after the budget announcement I did a quick back of the envelope calculation and worked out that if the excise freeze hadn’t occurred that petrol prices would be about 20c a litre more expensive than they are now. Assuming a petrol tank that can take 65 litres that’s about $13 more per tank. I don’t know tanks people use per week, but its easy to work out the impact on family budget over time.

To be clear – the Abbott government is not talking about a 20c per litre increase. They are simply going to continue fuel excise indexation. For a lot of people that seems sensible – the government will be maintaining the real value of the tax that it collects. Okay. What is the catch?

Third, the government will be indexing fuel excise to CPI. Changes in CPI is a generally accepted measure of inflation. This is where the war on tobacco comes in. Readers may recall that last year I wrote a short paper on the inflationary impact of tobacco excise. Follow the logic of what is happening.

Since 1983 tobacco excise has been indexed to the CPI and automatically increased twice every year in February and August. There is, however, a feedback loop. Tobacco makes up a component of the CPI calculation. Over the same period government has followed a policy of driving up consumer prices for tobacco products. The net effect of this has been to maintain the somewhat large weight tobacco has in the CPI calculation despite the large decrease in the incidence of tobacco consumption.

CPI - tobacco weight

So we have a loop – tobacco prices increases feed into CPI, increases in CPI feed back into tobacco prices and so on. Increased CPI prices will now feed into increased fuel excise that will feed into higher petrol prices. Those increased prices cascade through the economy. All that feeds back into the CPI and the whole cycle starts again.

But wait – there is more. In the 2013–14 budget the government announced that from 2014 tobacco excise will be indexed to average weekly ordinary time earnings (AWOTE) beginning in March 2014. So tobacco excise will be growing at a faster rate than CPI and then feeding that higher price increase into CPI that will then feed into even higher petrol prices.

Not bad enough yet? Over and above the acceleration of fuel excise indexation the previous government announced a 50% increase in tobacco excise phased in over 2013 – 2016.

On 1 August 2013, the former government announced an intention to introduce a 12.5% increase to the excise rate on tobacco each year over the next four years.
This staged approach to increasing the excise rate on tobacco will begin on 1 December 2013 with further increases on 1 September 2014, 1 September 2015 and 1 September 2016.
The rate increases occurring from 2014 to 2016 will be calculated as 12.5% plus the average weekly ordinary times earnings (AWOTE) rate – an additional measure announced in the 2013–14 budget.

End result, we have an even bigger loop. Bigger tobacco price increases will feed into the CPI calculation that will feed into the fuel excise price increases that will cascade into the economy, and so on.

Nice (not so) little rort that the government has going there.

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99 Responses to Petrol prices and tobacco excise

  1. Andrew

    But petrol tax is an evil tax that hurts Working Families. Except when it’s expressed as a Carbon Tax, then it’s a good tax. Except during the 3 months when it was ALP policy to abolish the WBCT – then it’s a bad tax. But then any tax hypothecated to govt spending on a “low carbon economy” is a good tax. Except when Abbott666 does it – then it’s called Direct Action and will destroy the planet.

    The same argument applies for Health Taxes For Your Own Good, like tobacco tax.

  2. Snoopy

    If a minority of people smoke, why is it still in the CPI basket?

  3. ar

    If a minority of people smoke, why is it still in the CPI basket?

    Because autocrats love subjecting the public to arbitrary measures?

  4. And as I fork out extra for fuel to drive on roads being rapidly turned into disaster zones by tonnes of mining machinery flooding into the Surat basin, these same multinationals wrecking the roads and refusing to employ locals are subsidized by the diesel excise.
    Unleaded costs 156.9cpl in Roma.

    Write a paper on that, Sinc…………

  5. Zulu Kilo Two Alpha

    subsidized by the diesel excise

    Don’t know if mining companies are different, but the only diesel I get a tax credit – not a subsidy – is that diesel used off road.

  6. .

    Abolishing excise taxes would reduce a lot of poverty with the stroke of a pen.

    It would be utterly pro liberty and anti poverty to do so.

  7. Snoopy

    and refusing to employ locals

    More fucking Filipinos?

  8. Sinclair Davidson

    Write a paper on that, Sinc…………

    I have.

  9. Snoopy

    subsidized by the diesel excise

    That’s bullshit as has been pointed ad nauseam, but you drive a hybrid Camry heavily subsidized by taxpayers, no?

  10. Bruce of Newcastle

    Meanwhile the EU and Japan are trying to produce inflation. Perhaps the ECB and BOJ should ring up a certain Doomlord for advice.

    I know I know its neither your idea nor your desire Sinc, but if people overseas are going to be stupid with their voters’ money at least they can be stupid enough to give you some of it. You’ll use it better than they will, that’s certain.

  11. .

    Sinclair Davidson
    #1352265, posted on June 19, 2014 at 10:26 am
    Write a paper on that, Sinc…………

    I have.

    Lulz

  12. Mater

    Numbers,
    If they are driving on a public road, they are paying for the diesel in full. You’ll notice I didn’t use the word subsidy as it’s a misnomer when talking about the diesel rebate.

  13. .

    This is too important to point out and be drowned out by some narcissist:

    Abolishing excise taxes would reduce a lot of poverty with the stroke of a pen.

    It would be utterly pro liberty and anti poverty to do so.

  14. Joe Goodacre

    Why does CPI feed back into tobacco prices?

    Tobacco suppliers may see CPI increases and want to increase their prices however whether that is accepted will depend on what the purchasers are willing and are able to pay.

    CPI is meant to measure inflation – if the money supply is larger because inflation has occurred, purchasers will presumably be able to pay more absolute dollars because their relative position will remain unchanged.

    If Sinclair is correct and the CPI numbers are distorted, then the inflation isn’t actually there – it’s been overstated. This would mean that purchasers don’t have the dollars to fund the tobacco increase. If tobacco suppliers increase their prices that is an increase in cost relative to the income people have available. I thought this would suggest a decrease in consumption would result.

    Secondly, how can a tax be a positive feedback for more tax revenue. If the excise rate is increasing, won’t the increase in excise reduce the demand for tobacco?

    This argument would extend to the fuel excise as well.

    It seems to me that the compounding effects predicted above are unlikely to eventuate because there are breaks in the feedback loop – that when prices rise in relative terms, people are predicted to consume less.

  15. Mining companies currently account for about 30% of corporate gross operating profits, but only around 15% of corporate tax receipts.

    From your paper, Sinc.
    That’s less than half my tax rate.
    I’m being screwed over by the miners.
    And they’re wrecking the roads I drive on and wasting my time when I get forced off the road by an eighty tonne rig.
    And they won’t employ any of the kids in the schools I work in.
    Isn’t commerce wonderful…………..

  16. Sinclair Davidson

    Secondly, how can a tax be a positive feedback for more tax revenue. If the excise rate is increasing, won’t the increase in excise reduce the demand for tobacco?

    That depends on the price elasticity of demand – treasury are forecasting increases in tobacco excise revenue.

  17. That’s bullshit as has been pointed ad nauseam, but you drive a hybrid Camry heavily subsidized by taxpayers, no?

    I drive a Commodore Ute.

  18. Sinclair Davidson

    That’s less than half my tax rate.

    Read more carefully – those are proportions not tax rates.

    The fact that the government refuses to spend the money it does raise from fuel excise on roads is a matter you should take up with your MP.

  19. Joe Goodacre

    Numbers – roads don’t get built by tax rates.

    They get built by tax revenue.

    So unless your income is in the billions and you’re paying 50%, chances are the miners corporate tax rate of 15% is paying more towards the roads they drive on then you are. Furthermore what about the royalty income? State governments build roads, state governments collect royalties. Why only look at their corporate tax as opposed to other forms of tax they pay such as royalties.

    If the kids don’t get jobs, it might have something to do with the minimum wage rates they have to pay, regardless of the productivity of someone fresh out of school who knows lots about the evils of global warming and the benefits of multiculturalism, but sweet nothings about how to be a diesel fitter.

  20. ar

    And they’re wrecking the roads I drive on and wasting my time when I get forced off the road by an eighty tonne rig.

    Wasting Teach’s time?

    Bwahahahahahaha…..

  21. Joe Goodacre

    That depends on the price elasticity of demand – treasury are forecasting increases in tobacco excise revenue.

    That isn’t much to rest an argument on…. how accurate are Treasury forecasts. I thought Treasury types didn’t understand lower tax rates more revenue, higher tax rates less revenue… and didn’t you use that same fact (Treasury predicting increase in excise revenue) to justify the argument that plain packaging laws increasing consumption?

  22. Sinclair Davidson

    Joe – you’re asking me what the net interaction effects from PP and excise increases. I can’t be sure. PP I think results in increased consumption. Increased excise in decreased (legal) consumption. Net effect? Probably reduced consumption – but enough to also reduce excise revenue?

  23. Bruce J

    Just a little information to put fuel prices into perspective:

    Average fill at a servo is around 35litres.

    Average distance travelled is about 15000km/year.

    ULP (91 octane) price in Melbourne metro area varies from about $1.40/litre to $1.63/litre (from prices posted on local servos in the last 2 weeks).
    Diesel prices in the same servos vary from $1.49 to $1.60/litre over the same time.

    A 1 cent/litre every 6 months is pretty small in the general scheme of things when compared with increases in supermarket grocery prices.

  24. Snoopy

    I drive a Commodore Ute

    the making of which was subsidised by taxpayers.

  25. john constantine

    in rates and registrations i pay over a dollar a kilometer for the distance my heavy vehicles travel on public roads.

    had another mate tip his truck over recently, the wet winter has got the gravel shoulders soft, and on the wrong road, in the wrong place, a wheel that cracks the crust just gets swallowed up, and away the vehicle goes. he will walk out of hospital,given time.

    the country is trying to meet a freight task demanded by an exploding population, with road infrastructure in many places designed for tray trucks that did eighty kilometers an hour.

    when the frightbats squark that roads are the problem, not the solution, do any of them stop to figure out how much of their daily requirements reaches them on the bus?.

  26. Joe Goodacre

    what the net interaction effects from PP and excise increases. I can’t be sure.

    Agreed – I don’t think anyone could be.

    PP I think results in increased consumption.

    The argument you’ve made elsewhere seems probable.

    Increased excise in decreased (legal) consumption. Net effect? Probably reduced consumption – but enough to also reduce excise revenue?

    Tobacco being in the CPI basket to me is not a supportable explanation of an increase in excise revenue – it’s based on the belief that inflation can be triggered by the behaviour of market participants as opposed to the relative change between the quantity of money and the goods and services backing that money. This would seem to be against what I understand about inflation.

    In relation to the latter, what the net effect will be on excise revenue from an increase in excise – I don’t know. It’s even harder to separate the effects of plain packaging.

    If I had to bet I’d say there’s pluses and minuses both ways, we’ll probably find nothing special went on over the course of the next couple of years compared to increases in revenue occurring in prior years.

    It will be interesting to see either way.

  27. Sinclair Davidson

    Gentlepeople – you’ll note I’m being particularly aggressive in keeping the thread on topic. Please modify your comments according.

  28. History

    I’d like to ask a question that seems never to be asked in Australia.

    For example, from an earlier thread, someone stated that “If I look back over the period of cigarette smoking we gradually learnt that it is harmful and it is addictive. As a consequence we realised that we need to eliminate cigarette smoking.”

    This is the government position….. that extortionate taxes and smoking bans are intended to reduce the incidence of smoking, hopefully to elimination (prohibition).

    My question is who is the “we” that decided that smoking had to be eliminated? Who decided that smoking is not OK? What authority did this “we’ have to make such a decision?

    Commentators simply accept that the goal is to eliminate smoking without ever asking who made this a societal ideal. Until the 1990s it wasn’t a societal ideal. So what changed? And who changed it?

  29. brc

    Isn’t commerce wonderful…………..

    Yes. Yes it is. I sure wouldn’t want to live somewhere without it.

  30. History

    The current antismoking crusade, very much in the eugenics tradition – involving the same medically-aligned personnel and repugnant methodology, is much like crusades over the previous 400 years. It is a moralizing, social-engineering, eradication/prohibition crusade decided upon in the 1970s by a small, self-installed clique of [medically-oriented] fanatics operating under the auspices of the World Health Organization and sponsored by the American Cancer Society (see the Godber Blueprint http://www.rampant-antismoking.com ). This little, unelected group, using much the same inflammatory rhetoric of its fanatical predecessors, decided for everyone that tobacco-use should be eradicated from the world – for a “better” (according to them) world. These fanatics were speaking of secondhand smoke “danger” and advocating indoor and OUTDOOR smoking bans years before the first study on SHS and extortionate taxes on tobacco “cost burden” analyses of smoking: In the 1970s, populations – particularly in relatively free societies – weren’t interested in elitist social-engineering, particularly by a group (medically-aligned) that had a horrible recent track record (eugenics). Given that their antismoking crusade would have otherwise stalled, the zealots conjured secondhand smoke “danger” to advance the social-engineering agenda, i.e., inflammatory propaganda. Until only recently the zealots claimed they weren’t doing social engineering, that they weren’t moralizing. Well, that’s a lie that’s been told many times over during the last few decades.

    The zealots’ goal this time is not to ban the sale of tobacco but to ban smoking in essentially all the places that people smoke (combined with extortionate taxes), indoors and out. Up until recently the social-engineering intent has been masqueraded as protecting nonsmokers from secondhand smoke “danger”. But even this fraud can no longer be hidden in that bans are now being instituted for large outdoor areas such as parks, beaches, campuses where there is no demonstrable “health” issue for nonsmokers. This dangerous mix of the medically-aligned attempting social engineering is a throwback to a century ago. We seem to have learned nothing of value from very painful lessons of only the recent past.

  31. History

    We need some history on antismoking. It’s terribly missing in the Australian discourse.

    It’s America that’s popularized antismoking insanity – again, and which other countries are following suit. The problem with Americans is that they are clueless to even their own recent history. America has a terrible history with this sort of “health” fanaticism/zealotry/extremism or “clean living” hysteria – including antismoking – that goes back more than a century.

    Antismoking is not new. It has a long, sordid, 400+ year history, much of it predating even the pretense of a scientific basis or the more recent concoction of secondhand smoke “danger”. Antismoking crusades typically run on inflammatory propaganda, i.e., lies, in order to get law-makers to institute bans. Statistics and causal attribution galore are conjured. The current antismoking rhetoric has all been heard before. All it produces is irrational fear and hatred, discord, enmity, animosity, social division, oppression, and bigotry. One of the two major antismoking (and anti-alcohol, dietary prescriptions/proscriptions, physical exercise) crusades early last century was in America. [The other crusade was in WWII Germany and the two crusades were intimately connected by physician-led eugenics]. The USA has been down this twisted, divisive path before. Consider the following: The bulk of claims made about smoking/tobacco were erroneous, baseless, but highly inflammatory. Unfortunately, the propaganda did its destructive job in the short term, producing mass hysteria or a bigotry bandwagon. When supported by the State, zealots seriously mess with people’s minds on a mass scale.

    For a brief history of antismoking, see:
    “Cigarette Wars: The ‘Triumph’ of the Little White Slaver” (1998) by Cassandra Tate. Google the following combination – “the endless war on tobacco” “seattletimes” – which should bring up a summary article of the book at the Seattle Times.

    Gordon L. Dillow (1981), “Thank You for Not Smoking” [The Hundred-Year War Against the Cigarette]

    Robert Proctor (1996), “The anti-tobacco campaign of the Nazis: a little known aspect of
    public health in Germany, 1933-45”

    [I provided links but got caught in moderation]

  32. MACK1

    I’m pretty sure Julie Novak wrote a piece showing that government charges and taxes are the main driver of inflation in Australia.

  33. tgs

    The bulk of claims made about smoking/tobacco were erroneous, baseless, but highly inflammatory.

    What would be examples of erroneous claims made about smoking? Genuinely interested.

  34. History

    “What would be examples of erroneous claims made about smoking? Genuinely interested.”

    Read the provided links.

  35. Leo G

    There is a lot more to this story than meets the eye.
    First, for price conscious consumers the ACCC has moved to limit the value of the discount vouchers.

    Add to that the incidence of tampering with petrol bowser electronic rate multipliers to cover fuel theft rackets at many Woolworths and Coles outlets. I estimate that expected cost at 3c per litre (a 1-in-5 chance of being charged an average 15% short quantity) .

  36. tgs

    You’ve provided one link to an e-book which I can’t read at work and a number of book references which aren’t readily available because my workplace doesn’t happen to be a library.

    It’s not unreasonable to ask you to give an example or two of some of those claims, is it? Can’t trouble you for a few sentences after the massive paragraph you’ve already posted?

  37. The Coalition government claims that they are out to reduce greenhouse gas emissions.
    How can a diesel fuel rebate make sense if they are fair dinkum?
    Something’s wrong here………….

  38. History

    Increased taxes on tobacco were proposed as a coercive, punitive measure since the mid-1970s. Once the zealots convinced legislators onto the antismoking bandwagon, taxes started to rise. But until only recently these rises have been fed to the public as being necessary to cover the “costs” imposed by smokers. It’s a lie. Until only recently, the zealots had been claiming that they weren’t trying to force smokers to quit. That’s another lie. This “partnering” between zealots and the State is highly problematic. The one [terrible] lesson learned by prohibitionists from earlier crusades is to not advocate immediate prohibition (which will fail). Rather, advocate increased taxes (amongst other measures). Government is very interested in taxes, particularly when it can be inflicted from an illusory “moral high ground”. It gives the government a license to extort. And extort the Australian government has. There are two automatic price rises on tobacco sparing politicians the embarrassment of constantly coming before the public to announce these hikes. As indicated by Sinc, their being tied to the CPI still wasn’t enough. They’re now to be linked to av week earnings which yields a higher rate. And then there are the multiplicity of massive excise hikes. It’s so incredibly, terribly out of control.
    And the zealots are always there to rationalize the tax hikes, to provide some cockamamie storyline to feed the public. The zealots then demand their cut of the booty (funding) to stay in comfortable employment and to further “educate” the public. In any other area this would be referred to as a racket. Smokers are being fleeced on fraudulent pretenses. Only more perverse is that smokers are being forced to pay for their own de-normalization, fleecing, and social rejection.

    Mike Daube and Simon Chapman have been pre-eminent in the Australian antismoking barrage. These guys have been with the Godber Blueprint from the very early days – late-70s early-80s – knowing full well what the antismoking goal has been from the outset. Simon Chapman’s “The Lung Goodbye”, a manual of underhanded tricks and tactics, presented at the 1983 World Conference on Smoking & Health makes interesting reading (I’ll provide the link if Sinc will publish it). If you read the Godber Blueprint, facts play very little part. Antismoking activists are interested in attention-grabbing slogans, keeping a high media profile, and exploiting “appeal to authority”.

    These zealot miscreants and the governments that have given them a red carpet ride over the last few decades need to be exposed.

  39. History

    tgs

    I did provide links which weren’t published. You can google any of those references.

    Surely you can wait to get home?

  40. Cynic

    As an academic economist I think you need to put this ‘rort’ into perspective.

    If you calculate the increment impact of the tobacco levy increases (12.5%) on the relavant part of the CPI index basket (2.32%), won’t it mean that the CPI index will increase about 0.29% (i.e. 12.5% x 2.32%) per annum faster than it would without the tobacco levy increases?

    When applied to the fuel excise levy (currently 38.14c/L), it means that petrol will probably go up about 0.11c/L faster per year than it would without the tobacco levy. So that 65L tank of fuel will be a whopping 7 cents more to fill up (about the same value as a discount voucher on 1L of petrol).

    So tomorrow the Herald Sun should be reporting “one in three Australian drivers admit there are days when they cannot afford to buy petrol, and after the ‘rort’ of the tobacco levy feedback loop on petrol excise indexing, this will increase to…… er…….. one in three Australian drivers admitting there are days when they cannot afford to buy petrol!

  41. Robbo

    Always voted Liberal but if they proceed to push up the already exorbitant price of petrol by an increase in tax then they will not see my vote again.

  42. Sinclair Davidson

    Cynic – ever heard of compounding?

  43. Leo G

    Numbers, to qualify for the diesel fuel rebate the vehicle operators must demonstrate compliance with the Australian Transport Council in-service diesel vehicle emission standard. The basis for the scheme was that the benefit from compliance exceeded the forgone revenue.
    It’s not really a greenhouse gas issue unless the net benefit has changed.

  44. Numbers, to qualify for the diesel fuel rebate the vehicle operators must demonstrate compliance with the Australian Transport Council in-service diesel vehicle emission standard.

    You obviously haven’t followed a double-knocker up the mountain recently.
    The emissions standards are honored in the breach, rather than the observance.

  45. .

    What mountains are there out at Dalby, numbers?

  46. Snoopy

    You obviously haven’t followed a double-knocker up the mountain recently.

    Neither have you if you are referring to a 2-stroke diesel powered truck or a Commer knocker. Both are long obsolete.

  47. entropy

    Personally I find the whole idea of an indexed tax, excise or government charge evil.

    The reason they exist is that it provides a luvverly increase in revenues for the government, and the best bit from its perspective is that it is all automatic, there is no need to messily debate an increase each year as part of the budget process. And that is before you get to the circularity issue that Sinc points out.

    Automatic indexation means the bad news is concerted in one day and then people move on to other matters. If they have to debate it and it drags on for months that makes it all too hard to increase taxes. Which is what we want. There should be a law against it ;)

    I wonder if the decision to rule unconstitutional the financial framework amendment bill has any potential lessons for automatic indexation?

  48. tgs

    I simply wanted to hear one or two examples for further interest. Apparently that is far too much effort although you managed to churn out another wall of text.

    Meh.

  49. Joe Goodacre

    ever heard of compounding?

    How can it compound?

    I understand the proposed mechanism – the excise tracks to CPI and tobacco is included in the CPI basket. This should then result in an increase in excise tax greater than inflation, which should reduce consumption and put a brake on any compounding increase in excise revenue.

    Have I missed something here?

  50. Sinclair Davidson

    What is a 1c or 2c increase every quarter becomes 20c over time.

  51. Cynic

    Yes Sinclair

    My parents also gave the speech about the miracle of compounding when I opened my first bank account. Unfortunately because interest rates on school childrens’ savings accounts were so low, the benefit of compounding was negligible. Just like your example. When you compound something that is so negligible, the impact is still going to be …… er….. negligible.

    Yes you have found a feedback loop in the CPI that is distorted by a government policy, but given the makeup of the CPI basket, there are probably hundreds of policies that impact on prices, price changes and subsequently the CPI calculations (e.g. tax provisions on investment properties, regulated service levels for utilities, subsidies to the car industry and manufacturing, inclusions of the pharmaceutical benefits scheme list of eligible drugs etc, etc.). The list is very long and I’m sure many of the distorting policies have a much greater impact on family budgets than a few cents.

    I too would be a little concerned about the impacts from Government policies on the CPI calculations as that also drives other costs in the economy (e.g. minimum wage bargaining, pension indexing etc.). This is a real public policy issue worth assessing.

    So what is the purpose of your analysis?

    Is it to address a systemic problem of Government policy distorting the CPI with subsequent perverse feedback loops in other areas of the economy. If so, what measure should be used for indexing?

    Or are you simply running spurious claims up the flagpole of public policy debate in behalf of the tobacco industry?

    Please advise your readers.

  52. Leo G

    You obviously haven’t followed a double-knocker up the mountain recently.
    The emissions standards are honored in the breach, rather than the observance.

    The scheme presently concentrates on excluding pre-1996 vehicles that are not certified to meet later emission standards and subject to an approved management scheme to maintain compliance.
    There is at present no guarantee that post 1996 vehicles will continue to meet the acceptance standard.
    It’s a rort to the extent that all vehicle engines should continue to meet the Australian Design Rule emission standard which applied when they were manufactured.

  53. What mountains are there out at Dalby, numbers?

    Dalby’s flat, but to get to Dalby from the east you have to negotiate the GDR at Toowoomba.
    It’s one of the steepest roads in the state.

    Neither have you if you are referring to a 2-stroke diesel powered truck or a Commer knocker. Both are long obsolete.

    Maybe they’re using wide cut diesel or the injectors are dirty. Whatever, between the dangerous slurry created on the surface from overflowing distillate tanks on the steep slope or the filthy exhausts, the scheme is not working as far as emissions are concerned.

  54. JC

    If it tracks the CPI of course there’s compounding effect, badacare, you nimrod.

  55. Sinclair Davidson

    So what is the purpose of your analysis?

    Is it to address a systemic problem of Government policy distorting the CPI with subsequent perverse feedback loops in other areas of the economy. If so, what measure should be used for indexing?

    Or are you simply running spurious claims up the flagpole of public policy debate in behalf of the tobacco industry?

    Please advise your readers.

    Yes, yes.

    Surely the issue is that government should stop taking measures that distort CPI.

  56. Bruce of Newcastle

    Numbers, do you accept concepts like justice and fairness?

    You do? Good. Then the diesel rebate is both just and fair. The companies get it because they are not driving around on roads built by government. They are driving around on mine roads built by themselves.

    If you do not accept justice and do not accept fairness then you can complain about the diesel fuel rebate.

    Now while we are on such taxes, please explain to me why tobacco is charged excise and marijuana is not, especially since the Left is dead set against tobacco but is wall-to-wall behind marijuana.

  57. Cynic

    Thanks

    I look forward to some analysis relating to a suite of government policies that have a much bigger impact. A good case study to start on would be regulated service standards on electricity distribution and water utilities. The standards have been largely set by engineers and politicians. This has triggered significant gold plating of infrastructure and the costs are passed onto consumers via the fixed components of utility bills.

  58. Joe Goodacre

    If it tracks the CPI of course there’s compounding effect, badacare, you nimrod.

    I understand JC – my issue is that is only true so long as demand is unchanged despite the increase.

  59. The companies get it because they are not driving around on roads built by government.

    80% of the traffic on the Warrego Highway between Dalby and Roma is generated by mining activity.
    The Warrego Highway was built by government.

  60. JC

    Cynic

    We haven’t heard of gold plating since the lying slapper was using that as an excuse as to why we have the highest energy prices in the western world after the imposition of the green scum carbon tax and allowing the moochers in on the renewball quota. Glad to see its return and having you introduce it.

    Badacare, I have no idea what the fuck you’re talking about. Stop babbling.

  61. Joe Goodacre

    It’s simple – if excise tax is meant to compound so that 1 cent becomes 20 cents, at what point do cig smokers say it’s too expensive and stop buying as much (thereby ending the compound effect).

  62. brc

    People clueless about compounding are also the ones stating in disbelief that a house in Sydney could have gone from $250,000 to $500,000 in the same amount of time that it went from $125,000 to $250,000.

  63. .

    The Warrego Highway was built funded by government taxpayers in a progressive taxation system.

    Well numbers – you didn’t build that.

  64. JC

    I don’t know the elasticities of smoking, you fucking idiot. However I do know that people seem to have switched to cheaper brands and chop.

    What’s your point, badacare?

    You were doubting compounding earlier until I picked you up on your stupidity and now you’ve switched to a discussion about cigs.

    STFU and get yourself busy on a conveyance on some other stuff, you moron.

  65. brc

    80% of the traffic on the Warrego Highway between Dalby and Roma is generated by mining activity.
    The Warrego Highway was built by government.

    Enough of this stupidity.

    The mining trucks that drive on the road pay diesel taxes and get no rebates.

    The earthmoving equipment on the flatbeds don’t use any diesel while being transported.

    Once at the mine, the tax on the fuel they use is not rebated because said equipment never drove on a road.

    Mining companies are unable to claim a diesel fuel rebate for regular trucks driven on regular roads. If they do, they are breaking the law. I doubt mining companies regularly break the law to save on a bit of road tax. I’m not familiar with the industry, but I would hazard a guess that they use freight companies to move their equipment around, and the freight companies would be ineligible for a diesel fuel tax rebate.

    I have no idea why this idiotic ‘mining companies get subsidies’ meme will not die.

    What happened to the OT snipping?

  66. Bruce of Newcastle

    80% of the traffic on the Warrego Highway between Dalby and Roma is generated by mining activity.
    The Warrego Highway was built by government.

    The companies pay excise on that fuel. Its the law that they do so.

    They do not pay excise on diesel used by mine trucks and on diesel generators which they use for on-site power. These uses are the overwhelmingly largest consumption of diesel by mining companies.

    Diesel excise is intended to pay for the maintenance and upkeep of roads.

    If you think heavy vehicles do not pay enough excise I recommend you contact your state and federal MP’s, since that is a general problem produced by heavy vehicles. They are the ones who legislated to allow B-Doubles after all.

  67. JC

    I have no idea why this idiotic ‘mining companies get subsidies’ meme will not die.

    The human filth, the greens started the lie with a dishonest piece of research… If you could call it that.

    This is why you need to lie right back… The lying slapper and earwax eater killed 4400 people!

  68. Once at the mine, the tax on the fuel they use is not rebated because said equipment never drove on a road.

    It does drive on the road. It wrecks the road.

    Here are some examples.

    You obviously haven’t seen some of the kit that transverses the public roads on the way to the camps. Complete mining camps including all the accommodation, the extractive gear, all fuel and water – it all goes west on flatbeds. They grind the roads to a pulp.

    I have traveled along the Warrego to the tune of 30000kms in the last 12 months. I see communities swamped, the use of amphetamines in small communities where they have never been seen before, and locals being driven out of townships because they can no longer afford to live there.

    God help the teachers and retail workers who are trying to find affordable rents.

  69. Infidel Tiger

    It’s a sad day when all the best arguments for not increasing the fuel tax are being made by the ALP in the House.

    Fucking Liberal swines.

  70. Bruce of Newcastle

    You obviously haven’t seen some of the kit that transverses the public roads

    Numbers, of course we have. I have worked in that industry for nearly 30 years. Never park a Hilux behind a mine truck.

    As I said, the companies pay diesel excise on all diesel they use off-site. That is the law. If you think that excise is not sufficient for the purpose, bring it to your MP. Perhaps 95% of their diesel use is on-site though, which by the metrics of justice and fairness they should not be paying excise for.

  71. Leo G

    The mining trucks that drive on the road pay diesel taxes and get no rebates.

    A rebate of 12.003 cents per litre is allowed for business use, including mining business, in a heavy vehicle (which uses a taxable liquid fuel) where travelling on a public road.
    A rebate of 31.622 cents per litre is allowed for off-road mining activities in any vehicle using taxable diesel fuel.

  72. The fuel tax credit scheme needs to be considered in light of the fuel excise.
    Currently, heavy vehicles with a gross vehicle mass greater than 4.5 tonnes traveling on public roads are eligible for 12.003cpl tax credit providing they meet criteria relating to vehicle age, compliance with ADRs and maintenance.

    If this scheme applies to on-road use (and I stand corrected if it doesn’t), where does it sit in terms of the excise?

  73. Bruce of Newcastle

    As an example, Numbers, I used to work at Woodlawn. There was a pothole on the road between the main gate to our pilot plant which we were careful to avoid, since it was deeper than our 4×4 was. The whole vehicle could disappear under the water in that hole, so large was it. The mine trucks barely noticed when they went through.

    Every 6 months or so I was amused when management would send heavy equipment out to our access road. The guys would dig up half of the road and drop it on the other half, then they’d roll it all flat again. The mine trucks were so big they squeezed the road so much it spread out like a pancake.

  74. Bruce of Newcastle

    A rebate of 12.003 cents per litre is allowed for business use, including mining business, in a heavy vehicle (which uses a taxable liquid fuel) where travelling on a public road.

    Presumably that is for all businesses? Eg Coles and Woollies semis? I was unaware of that. That’s something Numbers could write to his MP about.

    In any case only part of it is really paid, since any business costs are tax deductible.

    On the other hand the Federal government, including RGR, obviously decided that they get enough in company tax and royalties that stimulating business is a good thing.

  75. Leo G

    Presumably that is for all businesses? Eg Coles and Woollies semis?

    It appears so. Divisions 40 and 41 0f the Fuel Tax Act 2006 (July 2013) is my reference along with the ATO’s Fact sheet for fuel tax credit claimants (Fuel tax credits changes from 1 July 2013).

  76. Sinclair Davidson

    I look forward to some analysis relating to a suite of government policies that have a much bigger impact.

    You wish to commission research?

  77. Infidel Tiger

    I have traveled along the Warrego to the tune of 30000kms in the last 12 months. I see communities swamped, the use of amphetamines in small communities where they have never been seen before, and locals being driven out of townships because they can no longer afford to live there.

    God help the teachers and retail workers who are trying to find affordable rents.

    A bit more banjo, a dog dying and and you got yourself a country hit there, mister!

  78. .

    God help the teachers and retail workers who are trying to find affordable rents.

    The market is signalling that you aren’t as productive as a miner. Each according to ability and needs, squire!

  79. Marcurse

    The fuel tax credit scheme needs to be considered in light of the fuel excise. Currently, heavy vehicles with a gross vehicle mass greater than 4.5 tonnes traveling on public roads are eligible for 12.003cpl tax credit providing they meet criteria relating to vehicle age, compliance with ADRs and maintenance.

    Green Scheme
    Eligibilty is dependant on vehicle age, routine emission compliance, etc.

  80. James B

    Dot: not really. Housing prices in mining towns is a really fucking big and serious issue, and it’s all down to government restrictions on subdivision near them. Artificial land scarcity, essentially.

  81. Bruce of Newcastle

    and it’s all down to government restrictions on subdivision near them. Artificial land scarcity, essentially

    Unfair, James. I did work for Roxby. The company was, and is, sh** scared to release land for home purchases despite being in the middle of a desert. They are so because they know that one global conniption could deep-six the copper price and force them to downsize. Which would disembowel local property prices…think minus 80%.

    They are trying to protect their workers. It is the states that are the problem as they hate fly-in-fly-out. When you encourage that you automatically balance out the house price problem. South Australia is THE worst.

  82. James B

    No, Bruce, you are wrong.

    I can buy broadacre land around any mining town for a few hundred dollars an acre. For a quarter acre block the price should literally be nominal. A big 200m^2 house can be built, plus utilites and infrastructure provided, for about $200,000 — so that’s what the price of homes should be in these communities, not double or triple that.

    Although I disagree with Katter sometimes, he’s on the money here:

    >Explaining how the affordable housing scheme would work, Katter said, “We open up the land,”
    “… the price of land has got nothing to do with anything else except the restrictions placed upon land subdivisions by government. Remove those restrictions and I can give you housing prices that you can only dream of.”
    “We sold land in 1990 in Charters Towers for $6000 a block, and any time the price went over $6000 we’d just dump another 20 or 30 blocks on to the market. When that power was taken away from the local Mines Department, that price shot up to $126,000 for a housing block in Charters Towers.
    Under his scheme Katter says a block of land would cost around $25,000 to $30,000 and subdivisions would be born virtually overnight with the use of prefabricated homes. The required infrastructure such as extension of water supply, sewerage and road systems would be supplemented in part from the 20 per cent return from the Royalties for Regions scheme.
    “The wives that demand that they want to live on the coast, they will look very stupid, to pass up three quarters of a hectare, your own little kingdom where you can have a pony walking around the backyard, or fruit trees, or you know, kangaroos, if you like pet kangaroos, or whatever.
    “The really big contributing factor is greenies, and the town planners, the local blue heeler dog, they all get in the act. By the time they’ve all had their hit at you, you’re looking at retirement. It goes on for years and years by the time you please all the government instrumentalities.”
    “…we will give to you the cheapest housing available in the world…”

  83. .

    James B
    #1352790, posted on June 19, 2014 at 5:59 pm
    Dot: not really. Housing prices in mining towns is a really fucking big and serious issue, and it’s all down to government restrictions on subdivision near them. Artificial land scarcity, essentially.

    Numbers is unlikely to agitate for a free market even for his own good.

  84. Bruce of Newcastle

    No, Bruce, you are wrong.

    I don’t think so James, I worked for that company. As far as I understand it it was explicit company policy. I may be mistaken, not being high up in the heirarchy.

    There was, when I was working for them, extreme pressure on housing so much so they were trying to rent ancient dongas in Woomera. It was the topic of conversation in the town. But the people understood the problem too well, given the cyclicity of the business.

    It may be the local council was in cahoots. I don’t know. But I do know the release of land for residential housing was restricted on purpose, to try to protect the financial safety of the townspeople.

  85. Empire

    Numbers is unlikely to agitate for a free market even for his own good.

    Don’t be so sure.

  86. James B

    >But I do know the release of land for residential housing was restricted on purpose

    So you agree that I’m right?

    >to try to protect the financial safety of the townspeople.

    Yeah, nah. It just kills these rural towns. We need to dismantle all planning laws and let people use and subdivide land how they see fit.

  87. Cynic

    “Sinclair Davidson
    #1352707, posted on June 19, 2014 at 4:20 pm
    I look forward to some analysis relating to a suite of government policies that have a much bigger impact.

    You wish to commission research?”

    Hell no. I’m a self employed contract researcher with no government funded academic research position to underpin by personal research interests.

    I just thought that as a Professor of Economics with a lot of flexibility in picking and choosing the research you or your post grads do that you would be doing a lot more research on the real problems with CPI indexing if it was a genuine problem. After all, in 5 minutes I discovered the tobacco excise, fuel excise problem means bugger all. But the broader problem might be something worth doing.

  88. Sinclair Davidson

    Okay. Pity.

    I don’t suggest topics for research students – if they can’t choose their own topic they don’t have the drive to do research.

  89. Cynic

    If the IPA were a bit more serious, perhaps their members would find some robust research. It looks like it is a real issue.

  90. Sinclair Davidson

    The IPA does fund research – I have two PhD students funded by the IPA and I know that several others are being funded too.

  91. entropy

    Although I disagree with Katter sometimes, he’s on the money here:

    no he’s not. Anyone paying $6k for a house block outside Cloncurry would do their cash. It would be sunk money. They would never get a good price for it.
    Katter has always got some mad scheme for Cloncurry. Friggin’ idiot. But it doesn’t have to make sense. It just has to be a rant against the man, spoken with voice cracking, bleating compassion. The politics of complaint.

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