How your tax dollars subsidise fossil fuels
National tax-based subsidies that encourage fossil fuel production and consumption add up to a whopping $12 billion every year, approximately $461 for each Australian.
Rather than tackling climate change and record levels of air pollution, instead our politicians choose to dole out billions to a dirty and dying industry – one that also bears few costs for its devastating impacts on our health and environment.
Using estimates from the Australian federal government’s Tax Benchmarks and Variations Statement (TBVS) and Treasury papers, the table below lists measures within the national tax system that encourage the production and use of fossil fuels. The fossil fuel industry’s enjoyment of such benefits is an amazing feat, with many companies “donating” hefty sums to Australia’s largest political parties.
These figures are only ever going to be a low estimate. Fossil fuel subsidies can be difficult to find in the tax system and it’s likely some have been overlooked. These figures do not include state-level subsidies, direct government handouts to coal, oil and gas projects, or public financing of international projects through export credit agencies or international financial institutions.
| wdt_ID | SUBSIDY (VALUES IN $AU MILLIONS) | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 |
|---|---|---|---|---|---|---|---|---|
| 1 | Fuel tax credit scheme** | $6,913 | $7,168 | $7,343 | $7,623 | $8,072 | $8,450 | $9,117 |
| 2 | Statutory effective life caps (accelerated depreciation)*** | $1,745 | $1,650 | $1650^ | $1650^ | $1650^ | $1650^ | $1650^ |
| 3 | Concessional rate of excise levied on aviation gasoline and aviation turbine fuel | $1,260 | $1,300 | $1,090 | $750 | $960 | $1,020 | $1,070 |
| 4 | FBT – Application of statutory formula to value car benefits | $840 | $1,070 | $1,050 | $810 | $800 | $920 | $890 |
| 5 | FBT – Exemption for employee taxi travel to or from their place of work* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 6 | GST – Tourism; domestic travel as part of an international arrangement* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 7 | PRRT – Expenditure uplift rate* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 8 | PRRT – Gas transfer price regulations* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 9 | PRRT – Starting base and uplift rate for capital assets* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 10 | FBT – Alternatives to the logbook method of substantiating car expenses* | $550 | $550 | $550 | $550 | $550 | $550 | $550 |
| 11 | FBT – Exemption for minor private use of company motor vehicle* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 12 | FBT – Exemption for transport for oil rig and remote area employees in certain circumstances* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 13 | Shipping – Investment incentives* | $55 | $55 | $55 | $55 | $55 | $55 | $55 |
| 14 | Timor Sea Maritime Boundaries Treaty* | N/A | N/A | $55 | $55 | $55 | $55 | $55 |
| 15 | NRT – Crude Oil Excise | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| 16 | NRT – Junior Minerals Exploration Incentive | $0 | $0 | $1 | $2 | $6 | $8 | $6 |
| 17 | TOTAL | $11,693 | $12,178 | $12,179 | $11,880 | $12,533 | $13,093 | $13,778 |
^ This is not an official figure. From 2019-20 onwards, exact values for this subsidy are unavailable, being listed by the Treasury’s Tax Benchmarks and Variations Statement 2020 and 2021 as being worth >$1 billion. It was therefore assumed to be equal to the amount listed in the Tax Benchmarks and Variations Statement 2019 (the most recently reported value).
N/A = Estimates not available
* Values represent the middle value of a range estimated by Treasury. i.e. 5 is reflective of a Treasury estimate of 0-10, 55 reflective of a Treasury estimate of 10-100.
** Values taken from Australian Government Budget 2021-22, Paper 1; Australian Government Budget 2020-21, Paper 1; Australian Government Budget 2019-2020, Paper 1.
*** 2015-16 Mid-Year Economic and Fiscal Outlook (MYEFO) – Tax Expenditures. Item removed in subsequent MYEFOs.
All other measures and their corresponding values are estimates taken from the Australian government Treasury’s Tax Benchmark and Variations Statement 2021 (published 31 Jan 2022).
Subsidies via the Fuel Tax Credit Scheme
By far the biggest contributor to the tax-based subsidies total is the Fuel Tax Credit Scheme, which annually provides around $7.5 billion worth of credits and grants to cover the excise tax paid on petrol and diesel to reduce its costs to heavy users.
In FY2020, 16% ($1.17 billion) of these fuel tax credits went directly to the fossil fuel industry. We have included the full amount as it all goes to supporting fossil fuel consumption.
Subsidies via statutory effective life caps
Australia also pays out large subsidies through statutory effective life caps, which allow for accelerated depreciation and a shorter write-off period for many vehicles. These tax deductions cost around $1.65 billion worth of taxpayers’ money each year.
There are also a range of tax incentives for fossil fuel exploration and production, as well as measures encouraging aviation, shipping and motor vehicle use.
See also:
There are many ways that taxpayer money supports fossil fuel production. Read more here:
Find out more about direct contributions and handouts made to the fossil fuel industry: