Side-effects of car use costing Australia $100 billion per year

The side effects of motor vehicle use are costing Australia at least $100 billion each year, according to a submission released by the Public Transport Users Association (PTUA) today. The cost of impacts such as pollution and road trauma are more than three times the level of taxes and charges on road users, based on research outlined in the submission.

“We’ve known for a long time that car dependence is costing us dearly,” said PTUA President Daniel Bowen. “But the size of these social costs left us gobsmacked. It would be economic, social and environmental madness to keep driving down the road of car dominance.”

The submission was made to the federal government’s tax review to demonstrate how reforms to motor vehicle taxation could boost economic performance while also making Australia more environmentally sustainable and socially equitable. The submission estimated the costs resulting from motor vehicle use that aren’t paid by motorists themselves – known to economists as “externalities” or “social costs” – including air, water and noise pollution, congestion, carbon emissions, road trauma, obesity from sedentary lifestyles and the fragmentation of communities and natural habitat. Total social costs exceed taxes and charges paid by motorists by over $70 billion per year.

“Some people suggest that fuel tax should go towards building more roads, ” said Mr Bowen. “However, there is a long list of other costs that need to be paid first, like health bills resulting from vehicle exhaust fumes, like the loss of valuable farmland and open space to traffic, and like tax perks for company cars that add to traffic congestion. Motor vehicle taxes would need to triple to pay for the side effects of motor vehicle use.”

Mr Bowen also drew attention to the potential for reformed motor vehicle taxes to fund deep cuts in other taxes such as stamp duty or to slash the deficit. “The unrecouped social costs of motor vehicle use exceed $70 billion per year. Not only is this higher than the cash deficit announced in the recent federal budget, it’s about 40% higher than the total tax take of all states and territories combined, and 5 times their entire revenue from stamp duty on property sales. Reforms to motor vehicle taxation could cut the budget deficit and allow deep cuts to other taxes that harm economic performance. ”

The needs of vulnerable households must also be central to government thinking, Mr Bowen cautioned. “Although most petrol tax is paid by upper income households in the major cities, we must not forget people on low incomes and those currently without decent public transport. Targeted support for vulnerable groups must go hand-in-hand with fundamental reforms to transport planning so that walking, cycling and catching public transport are genuine options for more people.”

While Mr Bowen said that reforms to government taxation were important, he added that the funds should be spent wisely – by all levels of government. “Road spending will just make Australians more dependent on their cars and increase the negative side-effects of car use. The obsession with big ticket roads and metros needs to be replaced with a commitment to improving public transport services right across the board,” concluded Mr Bowen.

Designing a more efficient, equitable and sustainable motor vehicle tax system — Response to Australia‚Äôs Future Tax System Consultation Paper (PDF, 557 Kb)

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