At a meeting on Friday, 29 February 2008, the country’s Transport ministers agreed to increase the diesel excise by 1.365 cents per litre as well as indexing any future increases. This increase has been delayed until January 2009.
In addition to the tax increase, the Ministers agreed to increase the registration costs for some trucks. The registration charges on some multi-combination trucks will almost double in the next three years, as the changes are phased in.
With the industry already under mounting pressure from fuel prices, additional increases in operating costs may force some operators to the brink.
With additional pressures from fatigue, high fixed costs, inflation and low rates of pay, the transport industry is under increasing strain.
Our experience indicates that owner-drivers have one of the highest incidences of bankruptcy amongst sole traders. These operators focus on cash to meet fuel and truck repayments, but when it comes time to pay GST or meet insurance bills they get thrown.
There will be a push to pass on the price increases to the customer, but if your client is not proactive in reviewing its pricing structure, it risks being left behind on the side of the road as other operators pass them.
Lawler Partners Business Recovery and Insolvency team can provide you or your client’s with a business health checklist to assist you in designing a pricing program to capture these costs increases. For further information, please contact our Business Recovery and Insolvency team.
