Why cutting petrol taxes is not a good idea

Many people like to whinge about the price of fuel, but Steve Fielding’s idea of cutting fuel taxes is a very bad idea — it would inevitably lead to more usage, and cutting prices is the last way you want to try and fight oil shortages.

This opinion piece for ABC Online goes into more detail.

Petrol tax cuts the road to ruin
By Daniel Bowen

Who can forget the Great Petrol Rip-Off of the late 1990s?

Outraged motoring groups pointed out that fully half of the pump price of petrol was made up of government taxes. It was a scandal and an abomination. Governments were punishing the motorist by making their petrol expensive – at a whopping 90 cents a litre.

Read the rest.

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9 Replies to “Why cutting petrol taxes is not a good idea”

  1. Daniel
    yeah, you are right.
    Higher petrol prices send signals to citizens to (either) live near existing public transport or demand better public transport in their area from government(s). Higher petrol prices also make alternatives cheaper (public transport, electric cars). And give incentives to explorers to find more oil.
    Rog.

  2. Nice work Daniel, but I think country people who don’t have an alternative and never will need to be mixed into the equation. Many are poorer than we could ever find in Melbourne, but totally car dependant. Possibly a significant reason why they are so poor.

  3. That’s true Andrew; though there’s more that can be done for regional PT (particularly town services), a lot of rural people will have to rely on their own transport. Makes it even more important not to squander scarce petrol in the cities, where alternatives are more readily supplied.

  4. Part of the equation too has to be providing PT services that are actually useable for the majority of the communities they service (and I don;t mean just in terms of the obvious, such as timeliness, frequency and connection to other serrvices). Where I live, it’s about 60% families with two or more children under 12, and about 15% households with at least one adult over 75 or disabled in some way. Neither the pregnant mum with two toddlers in tow, nor the elderly gent with a walking stick, is comfortable on the massively overcrowded trains or safe on the aged and infrequent buses. And for this demographic, the whole “walk or ride a bike” argument is entirely a furphy. I don’t drive much – and we only run one family car, which my husband and I share – but I can’t see a way to dispense with the car altogether while I have groceries to buy and children to take places where the buses and trains don’t readily or safely take us. (try though I have, I have We walk as much as we can, but it isn’t enough to get rid of the car.

  5. I totally agree. People will not quit using petrol as freely as they do unless the price goes up.

    That said I agree with everyone else that if PT doesn’t improve right along with it then it’s the little guy who suffers…as per usual.

  6. Interesting article Daniel. It accuratly describes the issues and events happening here in the US too. I enjoyed reading the reader comments and opinions that followed. There is much discussion about oil company profits and fuel taxes here too. The price per gallon of regular unleaded gasoline (petrol) is hovering around $3.00 in Miami at this time. I think if I did my conversions correctly this is about 87 Australian cents per liter. (3.8 liters per gallon, $1 US = .90 AU) Australian fuel is surely much more expensive than ours. I saw something very interisting called “auto gas” while in Ausralia where propane is readily available at service stations to fuel cars converted to burn it. We have no such system in place here. I know that propane burns with much less pollution and engines are cleaner and longer lasting. I believe it’s cheaper too. If/when I might need to buy a car after I move to Melbourne should I consider an auto gas fueled car? I hope to use mass transit as much as possible but I might need to drive sometimes too. I would like to hear an informed Aussie viewpoint on this matter. As I will be starting with a clean slate in Melbourne I have the advantage to make good choices in my lifestyle with reguards to my impact on the/your Australian environment.

    By the way the grey menu is covering the text on this page again. The length of the web address for your abc news tax story seems to be pushing it further left.

  7. Whoops, I transposed the currancy figures (.90 US = $1.00 AU) but I think I got the fuel cost conversion correct in my previous reply. The grey menu is now behaveing well and staying off of the text.

  8. Jed, your “grey-matter suffering” is most probably due to the use of an older InternetExplorer version.

    In Europe you are finding EUR 1.50 / AUD 2.30 per liter a going rate for petrol on the motorways.

    The Dutch Government has tried to introduce yet another sales tax on ‘heavier cars’ as of Feb 1. The dealers simply got registration done well in advance of this date. This has resulted is thousands of cars in the dealers’ showroom, ready for people to take home. Who cares if it says Jan-2008 on the registration document anyway, when it saves you a handsome amount of money.

  9. Hi Jed. Welcome to Australia in advance. You are correct in that LPG burns with less pollution and is cleaner, but the engines wear out quicker. Not a problem seen too often as people do change their cars over. If you take the gas conversion cost into account, LPG is financially sound if your car does long distances or lots of travel. No point for a suburban car. If you wish to buy a brand new car, a hybrid petrol/diesel electric model would be the most environmentally sound but even that is arguable.

    My knowledge is a few years old so don’t take my word as informed.

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