Australian Government won't cut fuel excise despite soaring prices

The Federal Treasurer has ruled out any changes to the fuel excise, even as conflict in the Middle East pushes up prices at the pump.

“When it comes to the fuel excise, that’s not something that we’ve been considering,” said Treasurer Jim Chalmers at a press conference on Wednesday, March 4.

“We’ve got a lot of cost of living help rolling out in other ways, ways that you are familiar with, and we’ve got two more income tax cuts on the way as well.

“So we’ve found other ways to help people with the cost of living – cheaper medicines, more bulk billing, student debt relief, tax cuts and the like.”

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The fuel excise is a flat sales tax imposed by the Australian Government on petrol and diesel bought at the bowser.

It’s adjusted in February and August each year in line with the Consumer Price Index (CPI), and currently sits at 51.6 cents per litre.

The fuel excise has been criticised by some, including the Victorian Automobile Chamber of Commerce, as being a “hidden tax” because it’s built into the price at the pump; fuel is also subject to a 10 per cent Goods and Services Tax (GST).

Pauline Hanson’s One Nation is calling for a 50 per cent cut in the fuel excise, accusing Labor of “war profiteering”.

While the government has ruled out a change to the fuel excise, the Treasurer has sounded a warning to fuel retailers.

“I’ve taken, I think, an important step in making sure that the ACCC is helping to ensure that service stations don’t do the wrong thing by people when it comes to oil prices flowing through at the bowser,” said Mr Chalmers.

“We don’t want service stations to take advantage of people. We understand that there will be movements in the market, but retailers cannot be taking people for mugs.”

The fuel excise was originally designed to fund road infrastructure and maintenance, but research by the Australian Automobile Association (AAA) found only 57 per cent of revenue in the decade to the 2022-23 financial year was reinvested in public transport and roads.

Fuel excise revenue is expected to decline as Australians move to more fuel-efficient vehicles, as well as electric vehicles (EVs).

That has led to calls for it to be scrapped in favour of a universal road-user charge, covering not only vehicles with a combustion engine but also EVs.

The Australian Government confirmed last year it’s working with states and territories to introduce a road-user charge, but didn’t appear to suggest any change on levies imposed on owners of combustion-powered vehicles.

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