Short-term fuel tax cut may not be bad news

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Short-term fuel tax cut may not be bad news

A temporary cut to a government fuel tax ends this week, but industry figures say that the ensuing price rises won't necessarily be bad news for farmers and truck drivers.

Fuel excise was halved earlier this year due to the increasing cost of living.

It is expected that petrol and diesel prices will increase by 25.3 cents per liter when the cut ends.

There are signs of a reprieve for some users, with changes to mean different things for farmers and truck operators.

Fuel became cheaper when the excise was cut, but the fuel tax credit the trucking industry relied on was reduced to zero.

The tax credit was used to offset running costs, according to Australian Trucking Association chairman David Smith.

Without that fuel tax credit, it's very hard in our world because we've had to find that money out of cash flow, he said.

It has been a hard slog the last six months.

If you weren't able to pass that cost on, I doubt you'd be in business today. The tax credit will not make transporting goods cheaper, because these costs were passed down the supply chain.

The road user charge has gone up as well and vehicle registration prices have gone up by around three per cent.

It's a necessity to be able to pass that cost on to stay in business, to be viable, according to Smith.

The fuel excise and fuel tax credit may be less exciting for farmers.

When the fuel tax credit for truck operators reduced to zero, it was reduced to 23 cents for farmers.

The fuel excise will be increased this week, but CEO of the Australasian Convenience and Petroleum Marketers Association Mark McKenzie said farmers would be able to offset it by claiming an additional 23 cent per litre fuel tax credit.

The farmers are paying 23 cents per litre excise, and they're getting a fuel tax credit of 23 cents per liter, Mr McKenzie said.

After midnight on the 28th they'll be paying 46 cents a litre but they'll also get an increased fuel tax credit of 46 cents a litre. The tax continues to be neutralised. There could be more relief, with suggestions that oil prices could fall between 10 and 15 per cent from current levels, according to McKenzie.

We're seeing a lot of people talk about a global recession and that tends to dampen demand for oil and oil products like diesel.

Most of the markets are saying that the fuel price outlook and the diesel price outlook are likely to be relatively benign, and that the prices are likely to stay where they are or slightly declined. Diesel was cheaper to refine than petrol, but diesel prices had been as much as 50 cents per liter higher than petrol in recent weeks, according to McKenzie.

He said that there's been a stronger demand for diesel in the world.

In the high number of new diesel-powered cars hitting Australian roads, the high number of new diesel-powered cars could be seen.