Australian Firms Face Fuel Tax Hit

by Mary Swire, Tax-News.com, Hong Kong

06 September 2011

At least 1,500 Northern Territory (NT) businesses face a new 6.2 cents per litre tax on fuel under the federal government’s carbon tax, according to figures released as part of the Minerals Council of Australia’s response to the federal government’s proposed Clean Energy Future Legislation.

The Council says that the new fuel tax contradicts the government’s own claims that only 400 ‘big polluters’ nationally will pay the carbon tax. It believes that the tax will hit particularly hard Northern Territory mining operations, the communities that host them and the businesses that service them.

“In addition to mining operations, the carbon tax on fuel will hit Northern Territory construction, manufacturing, retail and wholesale trades as well as tourism operators, local governments and hospitals and health care providers,” the Minerals Council said in a recent statement.

Australian Tax Office data shows that NT businesses will be hit five times as hard by the tax as average businesses in other States. According to the data NT businesses claim an average of AUD55,000 (USD58,000) under the fuel tax credit scheme. The reduction in the credit as a result of the new carbon tax will mean that NT businesses are likely to face additional costs of AUD9,200.

In the first three years, the carbon tax on fuel will raise AUD3.3bn, a significant share of which will come from Northern Territory businesses. By 2020, the tax on fuel alone will have raised AUD16bn nationally.

“It is imperative that the Northern Territory government make urgent representations to the Gillard government to urgently reconsider the carbon tax,” said Peter Stewart, Executive Director of Northern Territory Division of the Minerals Council of Australia.

“It is a tax that will exacerbate the disadvantage of distance already suffered by Northern Territory businesses across all sectors,” Stewart said.

This number of affected businesses will increase to more than 100,000 on July 1, 2014, when the road freight sector, including tens of thousands of owner drivers, will be liable for the carbon tax on fuel, the Minerals Council says.

The Minerals Council also referred to newly released data highlighting the fact that Australia is doing better, not worse than other nations in constraining emissions. This data showed that the increase alone in China’s emissions in 2010 was 45 times the total emissions from the Northern Territory last year.

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