The terms of reference outline three key tasks for the Inquiry:
to examine the total existing structure of Commonwealth and State2 fuel taxation and related rebates, subsidies and grants, including the proposed Energy Grants (Credits) Scheme (terms of reference paragraph 1)
to report on the implications of the existing arrangements for:
- the economy, environment, the interplay between petroleum taxation and petroleum pricing, cost structures and marketing arrangements
- options available to government to reduce or eliminate any adverse effects of existing arrangements and to improve relevant administration arrangements (terms of reference paragraph 4); and
in making any recommendations, the Inquiry is:
- bound by Government commitments to maintain the benefits of current fuel rebates, subsidies and grants; not to consider long-term real increases in the effective level of diesel or petrol taxes; by the Government's wish to achieve overall budget neutrality
- to have regard to impacts on various sectors of the Australian community (terms of reference paragraphs 2, 3, 5 and 6).
The key elements of the terms of reference are summarised in Diagram 2.1.
In making submissions to the Inquiry, consideration should be given to the scope of issues both covered by and excluded from the terms of reference.
Key elements within the scope of the Inquiry include:
fuel taxation, rebates, subsidies and grants, including administration arrangements at both Commonwealth and State levels;
examination of the proposed Energy Grants (Credits) Scheme to commence from 1 July 2002 (replacing the existing Diesel Fuel Rebate Scheme and the Diesel and Alternative Fuels Grants Scheme):
- the Inquiry will not impact upon the Government's commitment that the Energy Grants (Credits) Scheme will maintain benefits equivalent to those available under the two existing schemes; and
the interplay between fuel taxation and petroleum pricing, cost structures and marketing arrangements:
- the terms of reference specifically ask the Inquiry to report only on the interplay between the tax system and these related issues
- the Inquiry is required to examine the relationship between tax and pricing, broader influences are the subject of a separate examination by the Australian Competition and Consumer Commission.
Specific issues excluded from examination by the terms of reference include:
commercial electricity generation - the Inquiry will examine how fuel is taxed according to its use `but not for commercial electricity generation';
income tax arrangements (including royalties and the Petroleum Resource Rent Tax) and the crude oil excise; and
options involving long-term real increases in the effective level of diesel or petrol taxes paid by business or private consumers.
The Inquiry is also asked to have regard to a number of issues, including:
the Government's wish to achieve overall budget neutrality in relation to petroleum products - budget neutrality refers to the combined effect of revenue and expense measures whereas revenue neutrality refers to revenue measures alone;
the use of fuel that would deliver better air quality and contribute to greenhouse objectives - while the Inquiry will examine the relationship between fuel use and greenhouse objectives, it is not the role of the Inquiry to develop a greenhouse policy response; and
the welfare of regional, rural and remote communities.
Diagram 2.1: Key elements of the Terms of Reference
Submissions to the Inquiry should be received by the Inquiry Secretariat no later than 30 September 2001.
The Inquiry is intending to make submissions publicly available in a number of formats on the Inquiry's website, except for commercial-in-confidence or other confidential material provided as part of a submission. Please clearly mark any confidential material or indicate clearly if you do not wish your submission to be made public.
It would be helpful if the Inquiry could be provided with a signed original of the submission, together with an electronic version on a diskette or as an attachment to an email message. It would be appreciated if virus scanning of both electronic versions or diskettes is undertaken before sending.
Interested parties are encouraged to make use of the Inquiry Website and email address in making submissions.
The Inquiry website is: http://fueltaxinquiry.treasury.gov.au.
Printed documents may be sent to the Inquiry by mail or fax to:
The Inquiry has already held preliminary meetings with some interested groups to gain an understanding of the issues that are likely to be raised in submissions.
Following the final date for lodgment of submissions (30 September 2001), the Inquiry will be undertaking further consultation, the timing and arrangements for which will be announced after submissions have been received.
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