VHCA response to Government Bill

Mar 06 2017

The VHCA response to the ill-considered commercial passenger vehicle industry Bill 2017

PREPARED FOR: Shadow Minister for Public Transport, Hon David Hodgett MP

The Commercial Passenger Vehicle Industry Bill 2017 (the Bill) displays the reality of the Government’s tick the boxes exercise of consultations with stakeholders, including our Membership, through its complete lack of understanding of the practicalities of our industry and the way our businesses operate and a swag of unintended negative consequences of its Bill.

1. The bill is destructive to small business, and favours large corporations

The Bill is stacked against small business operators because it prevents:

a)      the off-loading jobs unless they have been booked through a booking service provider;

b)      price negotiation by requiring written affiliation agreements through a service provider

The real cost
As government tax collectors, each and every fare, comes with a whole new suite of obligations and regulations, which will be both arduous and costly to our businesses, the taxpayers of Victoria and the Government.

The Minister in introducing the Bill said, “compliance costs are expected to be low”, when the arithmetic clearly shows this will not be the case. Take for example, a hire car or limousine operator who does 100 trips a year running a wedding car service. To report a $200 tax to comply will cost the operator’s business and the government at least 10 times that amount to process. To take another example, a person who drives a wedding car on weekends only, doing 40 full day jobs a year, will either need to engage a booking service provider, which would eat substantially into their profits, and prevent customers from dealing directly with them, or become a registered booking service provider and pay the Government $80 per annum. Even if an operator were to absorb the $2 trip tax into their price, that cost becomes taxable revenue, which in reality means it will be $2.20.

The Government has failed to take into account the everyday complexities of our industry - with multiple fares, bill splitting, on-call hire where, under the Bill’s present iteration, it appears no fee would apply? Who is expected to pay when a job is given from one booking service provider to another? In some cases, the trip tax is jointly and severally payable by more than one party, how is this tax to be collected by an operator?

This new tax is a state tax which will require thousands of new registrations for tax, not to the ATO, but to a completely separate body.

The Government has completely failed to consider the bureaucratic impost on small businesses having to collect, collate and pass data, as well as money, on to the Government, over and above already existing business obligations. Has the Government considered how complex this may make the lodging of income tax returns for our Members?

For the Minister to say, as she did when introducing the Bill, that there will be cost savings to hire car (and taxi) operators resulting from the abolition of hire car licence fees and the introduction of flexible fares, and thus booking service providers and trip providers will absorb or pass on the costs of “the levy”, is inexcusable given the plight of our Members whose businesses and assets have been decimated.

CPI indexed
The new $2 tax is to be indexed to CPI. Thus, we will be reinventing our procedures over and above our normal existing business activity and GST statements. 

The Bill stipulates that “a person who is liable to pay one or more levies for a return must lodge a return . . .within 30 days”. The indexing of the $2 trip tax will considerably increase the costs of processing and compliance to small hire car and limousine businesses.

The purpose of the $2.00 tax
The Minister explained to the House that the purpose of the $2 tax was “to help fund a fair and reasonable transition package for the taxi and hire car industry”.

This statement is incompatible with the Bill which, in its attempt to provide fairness to our Members, imposes exacting and costly obligations upon each and every one of them to, apparently, help them pay for the destruction of their assets.

The $2+CPI tax is permanent. There is no “sunset” once the compensation fairness hardship packages have been paid out to present hire car and taxi licence holders. Whatever figures are finally negotiated with the Government, and eventually paid out, the tax will live on in perpetuity as a blatant Government revenue raising exercise. For our Members this raises the obvious question: Why is the Government only going to compensate our losses at a pittance of the hitherto Government established cost, when the trip tax will be adding to its coffers forever?

2. The Bill may be unconstitutional

Surprisingly, the Bill purports to regulate and impose a fee on transportation within Australia where the journey originated in Victoria.  This is an apparent breach of s92 of the Constitution guaranteeing (Free Trade Between States) “trade, commerce, and intercourse among the States whether by means of internal carriage or ocean navigation, shall be absolutely free”. It would be surprising if the Government, which did not appear to do any economic modelling of the financial impact of its Bill had, in fact, sought senior and significant advice on Constitutionality and the impediment of a potential High Court challenge.

The Bill may also be attempting to act outside the powers of the Victorian Government, under s16 of the Constitution Act (VIC) 1975, in seeking to act extraterritorially, by imposing a fee on booking service providers outside the jurisdiction of Victoria. 

With months to get its legislation right, the Government has bungled again. Having already lost to Uber once, it may do so again, at the cost to the Victorian taxpayer of millions. All the while, the existing commercial passenger vehicle industry, our Members, will continue to live and try to operate in an environment of fear, anxiety and financial uncertainty.

The VHCA calls upon the Opposition to block the legislation until the Government presents a coherent, rational, complete reform package in a single package. The imposition of a tax, before the full suite of measures, which will determine the form of the deregulated industry, lacks transparency and accountability.

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