The Australian Livestock and Rural Transporters’ Association (ALRTA) is calling for the road user charge (RUC) to be cut by 22.1 cents per litre (cpl) for the next six months.
The ALRTA said that will enable operators to reclaim the usual 17.8 cpl fuel tax credits (FTCs) that were wiped out by the Australian government reducing the excise to 22.1 in the federal budget.
Operators usually pay 26.4 cpl as a RUC. By reducing the RUC by 22.1 cpl to 4.3, truckies will again be able to claim 17.8 cpl and avoid the looming bill shock at BAS time, said ALRTA national president Scott McDonald.
“With the previous 17.8 cpl fuel tax credit now effectively reduced to zero, businesses will now need to accumulate and set aside cash to pay taxation liabilities,” said McDonald in a newsletter to members.
“This is a ticking time bomb for many road transport businesses that do not as yet fully understand this element.”
McDonald said that the lack of consultation and poor understanding of the impact of the fuel excise cut on trucking businesses has short-changed the industry and produced a red-tape nightmare.
“The national average price of diesel has increased by 58 cpl since December 2021. Trucking businesses have limited capacity to pass on such dramatic increases,” he said.
“ALRTA appreciates the Australian government’s attempt to provide temporary relief from soaring fuel prices. Given that transport costs are embedded in almost all Australian goods and services, reducing fuel excise by 22.1 cpl has potential to reduce business costs and cost-of-living pressures for all Australians.
“However, the effective net benefit for heavy vehicle operators is just 4.3 cpl, not 22.1 cpl.
“This is because trucking businesses pay an effective fuel duty rate of 26.4 cents per litre, not the full rate of 44.2 cpl paid by other motorists. Our normal 17.8 cpl fuel tax credit for on-road fuel use will be reduced to zero.”
McDonald added that on the surface, it would seem that a 4.3 cpl net fuel discount is better than no relief at all. However, this perspective does not appreciate the contracting chain and cash flow implications within the trucking sector.
“Firstly, most customers have heard that fuel excise has been reduced by 22.1 cpl. Many are now demanding a commensurate reduction in their freight rates.
“Secondly, operators with agreed fuel levies in place are now at the mercy of contracting parties. This is because fuel levies are adjusted with reference to bowser prices. When such contracts are enforced, the transport operator must accept lower freight rates, cutting into profit margins or perhaps even resulting in a loss.
“Thirdly, explaining the current situation to customers and attempting to renegotiate contracts on a temporary basis for the next six months is time consuming and frustrating for all parties. Most operators feel it is simply not worth the effort for such a small net cost reduction.”
McDonald said ALRTA is also aware of members who have approached their accountant for advice, only to be told that FTCs will continue to apply.
In one such incident, a member made three separate approaches before their accountant finally provided correct advice.
“Consultation with the trucking sector prior to the fuel excise reduction announcement was severely lacking. Consequently, the real impact of the change was poorly understood by policy makers.
“As I understand it, neither the ALRTA nor the Australian Trucking Association were contacted by Treasury to discuss the proposed measures. Further, our associations have established that Treasury did not even consult with the ATO.
“This is a significant consultation failure given the obvious taxation implications and operational impact on trucking businesses.
“The last time our trucking associations were not properly consulted, Australia experienced empty supermarket shelves for the first time in decades. No one wants that repeated.
“Australian truck drivers have carried the nation through drought, fires, floods, COVID-19 and now soaring prices for fuel and adblue. The last thing Australia needs is further pressure on our road transport supply chain via ill conceived, albeit well intentioned, taxation changes.
“The only way to fix this problem is to immediately reduce the road user charge by 22.1 cpl and reinstate the fuel tax credit.”
“If the ALRTA recommendation was implemented, trucking operators would receive an effective fuel cost reduction of 22.1 cpl that would remain stable during the temporary relief period. They would be able to honour contractual fuel levy obligations and maintain current cash flow arrangements.
“Importantly, trucking operators would be able to pass on savings by way of lower freight costs to customers, and ultimately, consumers to achieve the government’s intended cost-of-living relief.”