Moving towards a low carbon economy in Australia - a taxing question? A comparison of tax laws that affect the cost of road transport activities in Australia and Germany

2017-10-11T04:19:25Z (GMT) by Johnston, Vanessa Lea
This thesis examines how tax laws can be used most effectively to encourage mitigation of greenhouse gas emissions from Australia’s road transport sector by creating or imposing a price on those emissions. Australia is obliged by international law, including the United Nations Framework Convention on Climate Change and the Kyoto Protocol, to mitigate greenhouse gas emissions in an attempt to avoid the consequences of global warming and climate change. Although greenhouse gas emissions arise from activities in all economic sectors, it is imperative that Australia mitigates greenhouse gas emissions that arise from transport, and especially road transport. Transport is vital to Australia’s economy and indispensable for the movement of moving people and goods. Despite this, transport makes a sizeable and increasing contribution to Australia’s annual greenhouse gas emissions, over 90 per cent of which are attributable to road transport activities. Importantly, road transport greenhouse gas emissions continue to increase despite improvements in vehicle design and fuel mix. Australian laws should encourage road transport to be used in an environmentally sustainable manner, taking account of the social and environmental cost of greenhouse gas emissions associated with these activities. A tax is an economic instrument capable of being used to create or impose a price that internalises social and environmental costs into the cost of road transport. This is known as a ‘carbon price’. Adjusting the price of road transport in this way should encourage entities to minimise or avoid carrying out activities that cause greenhouse gas emissions, or alternatively, pay a higher price for the privilege. Based on price, entities will be encouraged to favour road transport activities that release fewer greenhouse gas emissions, leading to mitigation of greenhouse gas emissions. The question of how tax laws can be most effectively used to encourage mitigation of greenhouse gas emissions from Australia’s road transport sector is answered by comparing Australian and German laws and policy measures that relate to the cost of using, purchasing, and owning motor vehicles, and recommending legislative reform. Germany has been selected for comparison with Australia because of important similarities, including the contribution made by road transport to annual greenhouse gas emissions, and the extensive road networks in each state. Most importantly, Germany has also been chosen based on the desired outcome of comparison; emissions from Germany’s road transport sector are steadily decreasing. By reason of the above, German laws and policy measures could provide useful guidance for Australian law reform. Principles of functional comparative theory are used to ensure that Australian and German laws and policy measures can be compared in a way that provides useful and relevant insights for this purpose. The key finding of the thesis is that tax laws, when designed and used appropriately, are an effective means of encouraging mitigation of road transport greenhouse gas emissions. The thesis makes several recommendations for legislative reform in Australia on this basis, and draws general conclusions about the usefulness of comparing Australian and German law to provide the basis for those recommendations.