Replace fuel excise: NRMA

With fuel excise scheduled to be reintroduced in full on 29 September 2022, the NRMA is calling on governments to work together to transition the antiquated tax system, safeguard the uptake of EVs from premature charges, and improve equity for all road users.

The NRMA is calling on governments to work together on transitioning the antiquated fuel excise, which will increase to 46 cents per litre on the wholesale price of petrol and diesel on 29 September.

A more progressive and equitable ‘user pays’ charging model will help to ensure that governments are able to raise the necessary funds to build and maintain roads over the long term.

The NRMA believes a ‘Road User Charge’ model will improve the current tax system and help to ensure greater fairness for road users as Australians transition to more fuel efficient vehicles, including fully electric variants.

Transitioning the fuel excise to a Road User Charge model should be revenue neutral and not increase the overall tax burden on motorists.

Reform should also include consolidating other road-related taxes and charges, including registration and stamp duty, to simplify the system and improve transparency for motorists.

Critically, a Road User Charge should not create a further barrier to the uptake of EVs in Australia. Last year, the NRMA supported introducing a 2.5c/km (indexed to CPI) charge on EVs, but only from 1 July 2027 or when EVs represent 30 per cent of new vehicle sales.

The NRMA worked closely with the NSW Government on setting this balanced approach to a Road User Charge which has since been adopted by several other state governments.

The existing fuel excise increasingly leaves those in regional and remote areas who drive longer distances or have fewer public transport options worse off.

Families from low socio-economic backgrounds are also unfairly exposed as they can least afford to upgrade their vehicles to newer and more fuel efficient models. For example, the current Toyota Corolla is up to 22 per cent more fuel efficient than the same model from 10 years ago.

NRMA’s CEO Membership & Motoring Emma Harrington said governments must work together to transition the fuel excise to a more equitable model that’s better suited to Australia’s changing mobility landscape.

“Australia is now ready for sensible reform of the tax system to ensure a fairer and more equitable way of charging motorists for road use without increasing the burden on families and businesses”, Ms Harrington said.

“The fuel excise is increasingly becoming less sustainable as a revenue source. The NRMA believes that a Road User Charge model, initially based on distance travelled, will ultimately best serve Australian motorists as we move into the future.

“Once established, a Road User Charge should evolve to consider further use factors to improve equity and road network efficiency, including location, time of day and vehicle type. Price adjustments should also be considered over time to ensure sustainable funding.”