On the 5th. of August Australia’s fuel excise once again rose in line with the CPI, the latest increase lifting the rate from 49.6 cents per litre of petrol and diesel to 50.6 cents per litre. With most families already feeling cost of living pressures the biannual indexation of fuel is a big hit to the weekly family budget, most consumers already facing a price pinch at the bowser. While a 1 cent lift is by any measure a modest rise the increase takes total excise costs for a large SUV with an 80-litre tank to around $40. With the current national average retail price of a $1.93 per litre the motorist is paying 50.6 cents per litre in fuel excise and 19.3 cents per litre in GST – around 70 cents a litre or 36 per cent of the average retail price, in federal government taxes.

Critics have long argued that the application of 10 per cent GST on the retail price of fuel is effectively a ‘tax on a tax’. According to the available figures from the 2021-22 Federal Budget, the fuel excise was forecast to collect $13.9 billion in the year 2022-2023 and this was projected to rise to $16.65 billion in 2025-26. The fuel excise proceeds go towards maintaining and developing infrastructure and roads throughout the country.

Here are some examples of what the latest excise increase along with GST will cost the consumer as part of his or her weekly tank of fuel. On a Kia Picanto hatchback with a 35-litre tank - $24.50; on a Toyota RAV4 Hybrid with a 55-litre tank (the biggest selling vehicle in July) - $38.50; on a Ford Ranger utility with an 80-litre tank - $56.00; and on a Nissan Patrol 4WD with a 140-litre tank - $98.00. Despite what appears to be a substantial part of the weekly fuel bill the proportion of fuel excise Australians pay hasn’t changed much in the last ten years and is lower when compared to other OECD countries. Australia in fact has the third lowest proportion of fuel taxes of all the OECD countries. Denmark tops the list with almost half of its fuel prices made up of taxes.

Understandably, owners of internal combustion petrol or diesel models feel disadvantaged by paying a fuel excise tax while owners of electric vehicles currently do not contribute to road maintenance and infrastructure. However, the N.S.W. government has indicated it will apply a road user charge to eligible EV’s from 1 July,2027, or when EV’s make up 30 percent of all new vehicle sales, whichever comes first. Plug in hybrid EV’s will be charged a fixed 80 per cent proportion of the full road user charge to reflect their vehicle type. The road user charge rate will be indexed to the consumer price index each financial year. For the 2024-25 financial year it is 2.906 cents per kilometre for a battery EV or hydrogen fuel cell vehicle and 2.324 cents per kilometre for a plug-in hybrid EV.