Productivity Commission to inquire into fossil fuel taxes and subsidies

It’s good to see that the Productivity Commission has been asked to opine on fossil fuel taxes and subsidies.

Many of the items claimed as fossil fuel subsidies by the Greens are rebates from fuel taxes but fuel taxes themselves are omitted from the calculations. According to the Henry Tax Review, Australia collects around $14 billion per annum in fuel taxes, which far outweighs fuel tax credits and other so-called fossil fuel subsidies, many of which are themselves questionable. There is no doubt that fuel taxes have  a powerful impact on fuel consumption, and therefore reducing greenhouse pollution, as any comparison of the United States (low tax, high consumption), Australia and Europe (high tax, lower consumption) shows.

Any comprehensive analysis of the impact of government policy on energy would also include the costs for consumers of mandatory renewable energy targets, also omitted in Green discussions.

While there is a well-accepted case for skewing the fiscal system further towards reducing greenhouse pollution (as under a carbon tax), it cannot reasonably be argued that the current Australian system favours fossil fuels.