The main fuel tax in Australia is an excise tax, to which Goods and Services Tax ("GST") is added. Both taxes are levied by the federal government. In Australia the GST (currently 10%) is applied on top of the fuel excise tax. In some cases, businesses may be entitled to exemptions or rebates for fuel excise tax, including

tax credits A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state. It may also be a credit granted in recognition of taxes already paid or a form of state "disc ...

and certain excise-free fuel sources. The "double dipping" (GST imposed on the excise tax) was fully compensated for by lowering the excise at the time the GST was introduced in 2001. While the excise stopped being indexed for inflation in 2001, indexation was reintroduced in 2014 (see History below). The tax collected is added to general revenue. From April 1 to October 1, the fuel excise was lowered or cut by 50% by the federal budget 2022 to 22.1c per litre for all fuels.

Excise tax rates

The excise tax on commonly used fuels in Australia as of February 1, 2022: * $0.442 per litre on

unleaded petrol Gasoline (; ) or petrol (; ) (see ) is a transparent, petroleum-derived flammable liquid that is used primarily as a fuel in most spark-ignited internal combustion engines (also known as petrol engines). It consists mostly of organic com ...

fuel (including standard, blended ( E10) and premium grades) * $0.442 per litre on

diesel fuel Diesel fuel , also called diesel oil, is any liquid fuel specifically designed for use in a diesel engine, a type of internal combustion engine in which fuel ignition takes place without a spark as a result of compression of the inlet air and ...

(ultra-low sulphur/conventional) * $0.144 per litre on

liquified petroleum gas Liquefied petroleum gas (LPG or LP gas) is a fuel gas which contains a flammable mixture of hydrocarbon gases, specifically propane, propylene, butylene, isobutane and n-butane. LPG is used as a fuel gas in heating appliances, cooking ...

used as fuel (

autogas Autogas or LPG is liquefied petroleum gas (LPG) used as a fuel in internal combustion engines in vehicles as well as in stationary applications such as generators. It is a mixture of propane and butane. Autogas is widely used as a "green" ...

or LPG as it is commonly known in Australia). * $0.081 per litre on

ethanol Ethanol (abbr. EtOH; also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol) is an organic compound. It is an alcohol with the chemical formula . Its formula can be also written as or (an ethyl group linked to a ...

fuel for use as fuel in an internal combustion engine (which can be reduced/removed with grants) * $0.041 per litre on

biodiesel Biodiesel is a form of diesel fuel derived from plants or animals and consisting of long-chain fatty acid esters. It is typically made by chemically reacting lipids such as animal fat ( tallow), soybean oil, or some other vegetable oil ...

(which can be reduced/removed with grants) Note: Petrol for use as fuel in an aircraft is taxed at $0.03556 per litre. In addition all fuels are subject to 10% Goods and Services Tax (GST). The federal government increased the fuel excise tax with effect from 10 November 2014 by restoring CPI indexation to the tax every six months, on 1 February and 1 August. From that date the fuel excise tax increased to 38.6 cents per litre. There are also a number of various

grants Grant or Grants may refer to: Places * Grant County (disambiguation) Australia * Grant, Queensland, a locality in the Barcaldine Region, Queensland, Australia United Kingdom *Castle Grant United States * Grant, Alabama *Grant, Inyo County, ...

and incentive schemes involving tax credits and rebates that generally apply to businesses or industries that rely heavily on the use of fuels, such as

transport Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land ( rail and road), water, cable, pipelin ...

and

aviation Aviation includes the activities surrounding mechanical flight and the aircraft industry. ''Aircraft'' includes fixed-wing and rotary-wing types, morphable wings, wing-less lifting bodies, as well as lighter-than-air craft such as hot a ...

. There are also rebates that encourage the production and importation of clean fuels.

Federal budget 2022

For 6 months from April 1 to October 1, the fuel excise was lowered or cut by 50% by the federal budget 2022 to 22.1c per litre for all road fuels.

History

The Commonwealth introduced a twice yearly indexation for Consumer Price Index of fuel excise taxes in 1983. In 2001, the Howard Government adjusted the excise rates because of the introduction of the

GST GST may refer to: Taxes * General sales tax * Goods and Services Tax, the name for the value-added tax in several jurisdictions: ** Goods and services tax (Australia) ** Goods and Services Tax (Canada) ** Goods and Services Tax (Hong Kong) **G ...

and stopped the automatic indexation of the fuel excise tax. The second phase of the Australian Fuel Tax Credits Scheme came into effect on 1 July 2008. Under these changes, all off-road business use of fuel became eligible for subsidies. The changes benefited businesses that do not run large vehicle fleets but consume large amounts of fuel in business processes (such as mining, manufacturing, construction, plant operations) became eligible for a fuel tax credit. The indexation of the fuel excise tax was reintroduced by the Abbott Government from 10 November 2014, with indexation being effected twice a year, on 1 February and 1 August.

State Fuel Taxes

States no longer apply any fuel taxes. Several states used to levy fuel franchise fees until 1997, when the High Court of Australia ruled in ''

Ha v New South Wales ''Ha v New South Wales''. is a High Court of Australia case that dealt with section 90 of the Australian Constitution, which prohibits States from levying excise. Facts The plaintiffs were charged under the ''Business Franchise Licences (Tob ...

'' that a licence fee based on the value of tobacco was unconstitutional, as it was an excise tax that only the Commonwealth can levy. The ruling brought into doubt the revenues of the states, and the states removed their fuel taxes. In consequence, the federal government introduced a fuel excise tax and gave the revenue to the states.

Queensland ) , nickname = Sunshine State , image_map = Queensland in Australia.svg , map_caption = Location of Queensland in Australia , subdivision_type = Country , subdivision_name = Australia , established_title = Before federation , establishe ...

used to provide an 8.354c/L subsidy on most fuels sold in the state, including on unleaded, blended unleaded, LPG and ethanol. The subsidy reflected the lower franchise fee Queensland charged compared to other states prior to 1997. This was usually reflected by an 8.354c/L price difference at the pump, as the subsidy was paid directly to retailers. The subsidy was removed from 1 July 2009.

External links

Fuel Tax Inquiry

References