Sources have told The Australian Financial Review that Agriculture Minister Barnaby Joyce and former industry minister Ian Macfarlane are among those exercised over a communique Australia is being pressured by New Zealand and others to sign on the sidelines at Paris.
The Coalition MPs are arguing it would pose a risk to the multi-billion dollar rebate on diesel excise that farmers and miners enjoy.
Mr Macfarlane raised it in a backbench policy committee on Monday morning which was attended by the chief executive of the Minerals Council of Australia, Brendan Pearson.
The Nationals Farmers Federation is also concerned and the Nationals were scheduled to discuss it at their Monday morning meeting.
From the AFR:
“The Nats are about to go nuts on it,” said one MP.
WTF is the Minerals Council doing in the backbench policy meeting?
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That aside, MB supports both the comminque and the rebate given it is not a subsidy. The Henry Tax Review argued that the diesel rebate is not a subsidy for the use of fuel:
The system is intended to remove or reduce the incidence of fuel tax from business in puts, so that its incidence falls primarily on certain private consumption of fuel. This limits the impact on production decisions. For example, fuel tax credits mean that all electricity generation using liquid fuels is effectively free of fuel tax, in the same way that coal or natural gas inputs to electricity generation are untaxed. [pg 288]
Similar arguments have been made by the Australian Treasury (see here and here):
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Fuel tax credits are not a subsidy for fuel use, but a mechanism to reduce or remove the incidence of excise or duty levied on the fuel used by business off road or in heavy on-road vehicles. The incidence of fuel tax is intended to fall on fuel use in private vehicles or for other private purposes and in light on-road vehicles used by business.
Similar to goods and services tax input tax credits, fuel tax credits remove taxation from business inputs. Their purpose is to avoid distorting business investment decisions and behaviour that would occur through taxing business inputs.
In the words of Glenn Stevens: chill out.
