So this has to be one of the most persistent furphies that I see online all the time. That Road User Tax is a necessary step towards a green future and EV adoption, and that Fuel Excise Tax will need to be replaced to ensure that there is correct maintenance on Australian Roads.
I’ll be honest, I have a condensed version of this saved in the notes on my phone for people that don’t understand, but I thought it was high time I actually just wrote a blog post on it, with all the sources linked, and just put this to bed.
So let’s get started.
1. Road User Tax pays for Roads
Maybe, kind, of, but indirectly.
Fuel Excise tax is a Federal Tax levied by the Australian Government on Fuel Sales in Australia.
Yes, Federal Government. Not State Government.
Now the Australian Government actually tracks how much fuel is sold in Australia
And as 2022 is not over, let’s take a look at the 2021 Data
| Month | Petroleum (ML) | LPG (ML) |
|---|---|---|
| January | 1,100 | 460 |
| February | 905 | 363 |
| March | 1,187 | 486 |
| April | 1,107 | 490 |
| May | 867 | 382 |
| June | 743 | 294 |
| July | 1,109 | 482 |
| August | 1,192 | 514 |
| September | 1,068 | 490 |
| October | 1,053 | 481 |
| November | 1,094 | 447 |
| December | 1,003 | 455 |
| Total | 12,428 | 5,344 |
So from this we get a pretty good view of fuel consumed in Australia. So the data is in Megalitres, and we don’t know exactly how much is tax exempt, or rebated, however from most sources I can find, this is anywhere from 10-25%, so we’ll split the difference and say that Primary Producers, ships, industry and Mines make up 15% of fuel consumed.
However as it is such a complex topic, we have to get more granular on the data, and not all fuel consumed here, is used here, we do import a significant amount of fuel.
| Month | Regular (<95 RON) (ML) | Premium (95-97 RON) (ML) | Premium (98+ RON) (ML) | Ethanol-blended fuel (ML) | Diesel oil (ML) | Aviation turbine fuel Domestic (ML) | LPG Automotive use (ML) | Aviation gasoline (ML) | Total (ML) |
|---|---|---|---|---|---|---|---|---|---|
| January | 730.7 | 164.2 | 278.3 | 147.1 | 2,294.9 | 144.8 | 26.8 | 4.1 | 3,790.9 |
| February | 707.9 | 160.7 | 258.5 | 154.5 | 2,350.5 | 145.8 | 26.5 | 4.3 | 3,808.7 |
| March | 811.7 | 180.8 | 286.4 | 177.8 | 2,628.0 | 201.2 | 28.8 | 5.6 | 4,320.3 |
| April | 758.7 | 170.2 | 271.1 | 171.7 | 2,597.4 | 227.2 | 27.1 | 6 | 4,229.4 |
| May | 781.4 | 175.9 | 283.2 | 182.5 | 2,746.9 | 243.0 | 29.2 | 6.4 | 4,448.5 |
| June | 716.5 | 162.2 | 256.5 | 171.6 | 2,620.0 | 203.2 | 26.5 | 5.8 | 4,162.3 |
| July | 663.6 | 136.5 | 209.3 | 136.6 | 2,548.3 | 170.3 | 27.6 | 5.2 | 3,897.4 |
| August | 619.8 | 124.2 | 187.1 | 117.7 | 2,565.7 | 124.7 | 24.3 | 4.5 | 3,768.0 |
| September | 617.5 | 129.7 | 195.2 | 127.1 | 2,527.9 | 134.4 | 23.0 | 5.4 | 3,760.2 |
| October | 693.1 | 150.4 | 231.0 | 155.4 | 2,706.6 | 139.0 | 17.3 | 5.1 | 4,097.9 |
| November | 780.4 | 169.2 | 258.2 | 173.8 | 2,673.4 | 161.5 | 25.9 | 5 | 4,247.4 |
| December | 818.2 | 182.4 | 283.5 | 181.1 | 2,687.1 | 204.2 | 23.9 | 4.7 | 4,385.1 |
| Total | 8,699.5 | 1,906.4 | 2,998.3 | 1,896.9 | 30,946.7 | 2,099.3 | 306.9 | 62.1 | 48,916.1 |
So now we can see all the fuel that was consumed in 2021, and that also avoids the pesky mathematical issue that the Australian Government decided in 2022 to just randomly halve the Fuel Excise Tax on Petrol in 2022, and suspend Diesel Fuel Rebates.
Now then you can grab the Fuel Excise Tax data from the Australian Taxation Office and make up a chart that looks like this:
| Regular (<95 RON) (ML) | Premium (95-97 RON) (ML) | Premium (98+ RON) (ML) | Ethanol-blended fuel (ML) | Diesel oil (ML) | Aviation turbine fuel Domestic (ML) | LPG Automotive use (ML) | Aviation gasoline (ML) | Total (ML) | |
|---|---|---|---|---|---|---|---|---|---|
| Fuel Consumed | 8,699.5 | 1,906.4 | 2,998.3 | 1,896.9 | 30,946.7 | 2,099.3 | 306.9 | 62.1 | 48,916.1 |
| Tax Rate | 0.442 | 0.442 | 0.442 | 0.442 | 0.442 | 0.03556 | 0.303 | 0.03556 | N/A |
| Earnings | $3,845,179,000 | $842,628,800 | $1,325,248,600 | $838,429,800 | $13,678,441,400 | $74,651,108 | $92,990,700 | $2,208,276 | $20,699,777,684 |
So from the data, before any exemptions or rebates, Fuel Excise Tax would have generated around $20,699,777,684 for the Australian Government.
Now if we assume that 15% of the market gets rebates, that’s ~$17,594,811,031.40 that landed in the Australian Government Coffers.
Weren’t you talking about roads?
Getting there, getting there. Needed some numbers for some context.
Now, being a Federal Tax, we can straight up go to the fact that Fuel Excise Tax doesn’t go straight into the transport ministers budget, and is in fact just a simple General Revenue Stream…so it’s not going straight to roads.
Second, we can look at the fact that the Federal Government needs to maintain 18,620 km of highways.
Now we can look into this riveting document on road construction and glean that it costs on average, $5.1 Million per lane/Kilometer
Given that most roads are 2 lanes, that’s $10.2 Million per kilometer through most of Australia.
And approximately 20% of the road network needs some kind of maintenance every year, or 3,652km of the road network.
So this becomes simple, 3,652km x $10,200,000/km = $37,250,400,000
Yes, that is $37,250,400,000 spent on maintaining simply the Federal Roads in Australia, which absolutely isn’t covered by the ~$17,594,811,031.40 that the government collects from Fuel Excise Tax in Australia.
We have a deficit of ~$19,655,588,968.60 in the road budget…
So Fuel Excise Tax doesn’t pay for roads, it doesn’t even pay for all of the Federal Roads, so you can be assured that it’s not “trickling down” to the states to cover state roads.
2. The State Government Needs to replace their tax stream
No they don’t.
Fuel Excise Tax is a Federal Income Stream, not a State one.
The state loses absolutely nothing by you not paying Fuel Excise Tax.
3. EV Users need to pay for EV Infrastructure
Whilst I can agree with this sentiment, EV users should pay to have EV infrastructure installed.
And in fact they do whenever they go to a Chargefox, NRMA Fast Charger, etc and pay to charge their car.
These companies aren’t giving you the power for free, they’re making you pay for it in some way or another, and they’re doing it to make money.
Now it costs the QLD Government an Average of $150,000 per charger, and they have 31 sites in QLD already on the QESH, or the QLD Electric Superhighway.
31 Sites x $150,000 = $4,650,000
Now Assuming a 20% to 80% Charge on a vehicle equal to a Tesla Model 3 with a 75kWh battery, that’s 45kWh every 20 minutes, let’s say that it’s every 30 minutes as people faff about and get back to their car.
That’s 48 Cars/Day @ 2,160kWh
That’s 336 Cars a Week @ 15,120kWh
That’s 17,472 Cars Per Year @ 786,240kWh
Now the cost is ~$0.44/kWh
So each year, assuming a $0.16/kWh supply cost the QLD government will make $345,945.60 and cost them $125,798.40
This is a total gain of $220,147.20
So the users are already paying for the infrastructure….by using the infrastructure…
And companies that are larger, like Tritium, well, they build the chargers, so they’re not paying $150,000 for a charger, and NRMA and Chargefox are buying many many more multiples of chargers than QLD Government, and all are charging around the same $0.44/kWh and have lower costs to install a charger than the government.
But even still, the government isn’t paying private companies to construct private networks that will benefit the private companies.
There have been some public-private partnerships to install charging stations, but it’s generally “We’ll build the carpark and run the high voltage substation, you install the chargers”
So the government isn’t paying for the charging infrastructure.
4. There has to be a tax
Why?
There doesn’t have to be a tax. We can have things and not pay the government for them.
That is a thing we can do.
5. The Government wants to tax it
There you go, we got there in the end.
The government just wants to tax EV users, there is no actual need for it.
They just want more money.
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