New proposed tax changes for motorists

A new proposal put before the Federal government recommends that motorists should pay based on usage and not the one-rate-for-all system currently in place. Essentially the new system will work similarly to mobile phone plans, you pay a setup fee and then pay as you go.
Sydney Traffic
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Using automatic vehicle identification systems (able to read number plates) drivers will be automatically charged a special levy when they drive on congested roads, they will be charged less in non-peak periods and Toyota Prius owners and owners of other 'environmentally friendly cars' would receive discounts for their 'limited' impact on the environment.

The proposal has been put forward by the Australian Automobile Association, which includes Australia's eight driver service organisations, (NRMA, RACV, RACQ...) and has already gained the endorsement of the government advisory group, the National Transport Commission.

Payments will include an "access charge" for driving via certain roads as well as a "user charge" which will act like a setup fee. The new system, if given the green light, will replace the current charges drivers pay:

  • federal fuel excise,
  • GST on petrol,
  • state registration charges,
  • stamp duty on registration and road tolls.

The exact amount motorists will be charged is yet to be determined, but given there will be no federal fuel excise, registration fee and GST on petrol, expect to pay up to a few dollars for travelling on your normal stretch of road - each day.

Pay as you go

Factors that determine your charge include the size of the vehicle and the wear it causes roads, an environmental charge related to the size of your engine, a levy to cover the costs of crashes and congestion charges.

Sounds like in ingenious idea doesn't it? Well it all depends on what you drive and how much you drive. The current system will charge an 80 year old grandmother who puts 5,000km/year on the odometer the same registration fee as an above-average motorists who travels over 50,000km/year.

The proposal sounds too good to be true, mainly because the money the government makes from excise on petrol is enormous. This year it is expected to raise $14.42 billion, out of which only an estimated $3.41 billion will be spent on roads.

Furthermore Australian manufacturers are sure to rally against the plan as it will put yet another strain on locally made 6/8-cylinder vehicles.

Would you agree to a pay-as-you-go system if it meant not having to pay the fuel excise and registration fee?