Global Climate Change Science News

[Hermit]

But hypothecation was reintroduced in 1983 and continued (at a level set discretionally by the government) after 1988.

It was not. All tax moneys collected by the government via the excise on fuels keep going straight into the the bucket called general revenue, and as long as that keeps happening any rebates on the fuel tax are subsidies.

[pErvinalia]

Read what I quoted from the link. It specifically refers to a road fund. That's hypothecation.

And:

[Hermit]

Read what I quoted from the link. It specifically refers to a road fund. That's hypothecation.

And:

The bicentennial roads funding program is a fuel tax surcharge of two cents per litre, and it has been hypothecated. The other 38 cents per litre are not. Mining is one of the industries that can and does avail itself to a 100% rebate of the tax.

The mining industry is responsible for half of Australia's exports - 135 out of 265 billion dollars worth in 2013. Australia is also a signatory to 19 free trade agreements, including FTAs with China, Japan and South Korea where most of those mining products go. Those agreements do not allow subsidies because subsidies provide an unfair trading advantage. It is therefore important for politicians of any colour (excluding green) to perpetuate the myth of road usage tax, for that is indeed not a subsidy. The pretence is of course rather threadbare, for the rebate is mostly applied to selected industries, and at varying rates at that. Nevertheless, it works in regard to our trading partners. If it did not, mining companies would become uncompetitive in the global market and shut down in droves. That would also spell the end or at least radical downsizing of most companies doing contract work for the mines. Thousands of employees would lose their jobs. I estimate that in the town I live in the workforce would shrink by more than half. It's electoral suicide of whatever government is in office at the time.

[pErvinalia]

Ahh fair enough. I missed the other 38cents.

But an argument could be made that it is still a public road tax. Lack of hypothecation doesn't all of a sudden mean it isn't a tax on roads, the same as lack of hypothecation of other taxes doesn't mean they are no longer targetted taxes. The removal of hypothecation makes sense in a budgetary management sense, unless one views taxes like a libertarian. A chunk of general revenue goes towards road maintenance. That comes from sources including the fuel excise.

[Hermit]

.Lack of hypothecation doesn't all of a sudden mean it isn't a tax on roads.

Yes, it does. Removing hypothecation turns it from a tax on road use to a tax on fuel. In an address to the Road Transport Forum Annual Convention (1999) Commonwealth Minister for Transport and Regional Services, John Anderson, agrees. He said: "Fuel excise today is a source of general revenue, just like income and other taxes." The Senate Economics
Legislation Committee's report on the Fuel Indexation (Road Funding) Bill 2014 [Provisions] and related bills agrees as well. From the report: "Fuel excise today is a source of general revenue, just like income and other taxes." Note the absence of any mention of "tax on road usage" or the like. There are plenty more examples of this type on the internet, but I think two quotes coming from the government itself are enough to make the point.

[pErvinalia]

But this is a practical measure for proper budgetary management. Hypothecation is really a libertarian type approach to taxation. It's not a mature approach to a modern economy. So just because it goes into general revenue doesn't mean it isn't a targetted tax. That's flawed logic. It just allows the gov to iron out fluctuations in various revenue streams.

[pErvinalia]

Fuel use is just the most practical way to measure road use.

[pErvinalia]

Put it this way, if they decided to implement a toll on every public road, instead of indirectly via fuel use, and pay the revenue into the general pot, would you claim that wasn't a road tax (because it goes into general revenue)?

[Hermit]

We've done more than enough laps of this argument. I leave you to it.

[Seth]

Whom: object form of who

"Clearly whoever made up this horseshit knows nothing about power generation and transmission. It's hard enough on land, much less in the middle of the ocean."

It was necessary to rap whomever on the hand for writing the crap sentence.

Grammar Nazi!

[pErvinalia]

We've done more than enough laps of this argument. I leave you to it.

Answer my last hypothetical. I think it shows the error in your thinking.

[Hermit]

OK then. One last lap. The fuel tax started off as a road use tax until the proceeds were ploughed in to general revenue. Now, to quote the words of Commonwealth Minister for Transport and Regional Services, John Anderson, once more: "Fuel excise today is a source of general revenue, just like income and other taxes." And with that the fuel tax rebates are turned into subsidies.

And with that comment I will definitely give it a rest for now, but feel free to continue arguing that the fuel excise is a road usage impost without my participation.

[pErvinalia]

You didn't even address my post. You've just repeated for the nth time the same poorly reasoned claim you've been making all along. The removal of hypothecation is an exercise in budget management, not changing the nature of a tax.

[Seth]

OK then. One last lap. The fuel tax started off as a road use tax until the proceeds were ploughed in to general revenue. Now, to quote the words of Commonwealth Minister for Transport and Regional Services, John Anderson, once more: "Fuel excise today is a source of general revenue, just like income and other taxes." And with that the fuel tax rebates are turned into subsidies.

And with that comment I will definitely give it a rest for now, but feel free to continue arguing that the fuel excise is a road usage impost without my participation.

A distinction without a difference I'm afraid. Jiggery-pokey by the legislature in turning an excise tax for a specific use into a general tax doesn't really change the root justification for imposing the tax, it merely allows legislators to evade the argument that such funds must be used only for the intended purpose of fixing roads. It's a common tactic of legislatures. They tout a tax as fixing this or that problem because it will ONLY be used for that purpose, which the taxpayers then approve of, and later, when everyone's forgotten the original promise, which meant that the tax WAS SUPPOSED TO GO AWAY WHEN THE NEED WAS MET, they just redefine it as a general tax so that they can keep on collecting it forever.

Here in Colorado we solved that problem with our Taxpayer's Bill of Rights that not only requires the legislature to ask the people (by vote) to approve ALL new taxes, but it also requires the government to state HOW MUCH tax will be collected from that tax, and to REFUND any collection in excess of that stated amount, and it also requires that dedicated taxes can ONLY be used for the announced purpose and may not be diverted or reclassified so as to avoid having the tax expire when it's met it's goal.

[pErvinalia]

It's not the tax itself that is in contention. It's whether the rebate on the tax paid by mines and agriculture etc is a subsidy or not. I see no reasoning to suggest it started being a subsidy rather than a rebate for non-public road use just because we modernised the tax system to get rid of hypothecation.