Why fuel excise is a big hit for drivers

123
3
Why fuel excise is a big hit for drivers

Australian motorists are having a lot of pain this year, with petrol prices pushing past $2 a litre.

The previous federal government changed its fuel excise in March to half of the fuel excise in a bid to reduce financial pressure on drivers.

The cut was not forever and the reduced rate is going to expire soon.

What does that mean for drivers when they're slugged with the full excise in about three months?

What is fuel excise?

Australians buy petrol because they contribute to a pool of funds that the federal government uses for roads and infrastructure.

For every litre of fuel you buy, you usually pay a tax of 44.2 cents, included in the price at the bowser.

The excise was halved to 22.1 cents per litre on March 30.

Why did the Morrison government cut fuel excise?

The move was intended to counter rising petrol prices to ease cost-of-living pressures.

The government estimated that the cut to the fuel excise would save the owner of a mid-sized car about $13 when filling it up, while businesses with fleet vehicles were expected to save thousands.

The competition watchdog would keep an eye on retailers to make sure the savings were passed on in full, according to Treasury Secretary Josh Frydenberg.

He said that the temporary reduction in fuel excise will not come at a cost to road funding, which will see more than $12 billion spent in the coming year.

The excise for petrol, diesel and all other fuel and petroleum-based products, except aviation fuels, was halved for 6 months from 12.01 am on March 30.

The cut has provided some relief for about three months and is due to return to the full levy of 44.2 cents per liter on September 28.

When the cut was introduced, Frydenberg predicted that the price for a barrel of oil would come back to around US 100 $147, down from around US 115 to US 120.

When will the full excise return?

From September 29th, drivers can expect to see a jump in petrol prices.

Labor supported the halving of the fuel excise with the halving of the fuel excise.

Both sides said the full tax would be reapplied to the prices in September and was only a six month measure in the lead-up to the election.

Prime Minister Anthony Albanese said to reporters this week that both sides had no plans to extend the cut further into the future.

"We can't do everything we want to do," Albanese said.

In the long run, if we don't do something about improving the fiscal position of the budget, the impact on households will just flow on down the track.

We have to make difficult decisions. What has happened to petrol prices since the excise was cut?

It's likely that you're still feeling the sting at the bowser with petrol prices still high.

Australian drivers paid an average of $2.11 per liter last week, according to the latest data from the Australian Institute of Petroleum.

If prices stay that way, we could be paying more than $2.30 per liter when we're slugged with the full excise in September.

The price of oil has plunged to about US 100 per barrel this week.

They are a factor in the international benchmark prices for refined petrol and diesel, so if retailers reflect the reduction in cost at the pump, drivers could see some relief before the full excise is reinstated.