In the recent meeting of State and Federal Ministers on 9 December 2022, one of the key decisions was to consider the Road User Charge for heavy vehicles.
As you will see from the meeting communique there is a clear intention of decreasing your fuel tax credit by somewhere between 6 to 9 cents per litre over the next three years with a decision to be finalised by February 2023.
As we have previously outlined in advice to members, it is very important to understand the full effect.
Local fuel prices have continued to climb as last week’s upward movement in international prices filtered through into the Australian market. This week has seen a 17% upswing in international wholesale fuel prices for Diesel and Jet Fuel.
As you budget for 2023 and commit to future contracts it is important to understand how this will impact your business. We strongly encourage members to seek professional advice from your accountant or specialised transport accountant to understand the implications for you on freight rates and fuel levies/surcharges.
When you consider Australian fuel prices over the last quarter, we had the international price peak in mid-June, the fuel excise adjusted upward for CPI in August, to 46 cents along with the removal of the Fuel Tax Credit (FTC). With the reinstatement of the excise and FTC in September, the Road User Charge (RUC) is now being considered for increases by government while we also have significant increases in shipping costs.
When accounting for any increase in the Road User Charge heavy vehicle road freight is going to experience yet another significant increase to major input costs. Consumers, who now pay the full fuel excise will also experience significant freight cost increases to an all time high as these major input costs have to be passed on for the road freight industry to remain sustainable.
For every increase in the RUC in real terms that means a decrease in your fuel tax credit. For example, if the RUC was increased by 6 cents per litre what that means is a 6 cents per litre decrease in your fuel tax credit.
When you consider in this country we build roads for cars and let trucks use them when can any justification be made that the Road User Charge be increased any more than the indexation increase applied to the Fuel excise.
The continuing review of the Road User Charge over the years still has no transparency being offered about what the charge pays for or what specific priorities for road freight are being delivered on.
Below is a diagram illustrating the effect that with every rise that occurs in the RUC what that really means is a decrease in your fuel tax credit.