Fiscal measures and vehicle fuel conservation

Australian self sufficiency in oil is declining. From the early 1990's Australia will have to fund rapidly increasing oil imports and find alternative tax revenues to replace present oil resource taxes. Because of low levels of fuel taxation, Australia has one of the world's lowest prices for vehicle fuel and one of the world's highest rates of vehicle fuel consumption. Switching to smaller and more fuel efficient vehicles is the accepted strategy for reducing vehicle fuel demand, but in Australia fuel price incentives are no longer sufficient to maintain, let alone increase, such a trend. The logical solution is to increase vehicle fuel taxes in Australia to levels common in similar economies. The additional tax revenue would offset the declining yield from oil resource taxation, and higher fuel prices would promote the adoption of more efficient vehicle technology. However, logical solutions must be defined in the context of existing social and political realities. Present government policy of not increasing vehicle fuel taxes to reduce fuel demand is based on economic theory. While this study concentrates on removing, or at least weakening, this economic argument, the real barriers to fuel tax increases are considered more likely to be found in the underlying social attitudes developed around the private motor vehicle in Australia, and the impact of these attitudes at a political level.