Return of fuel tax indexation infuriates motorists


The Government is set to reintroduce fuel tax indexation, which was scrapped in 2001, in a move which will hike petrol prices by about 1c per litre in each of the next four years.

Image credit: freedigitalphoto By: Rawich
Image credit: freedigitalphoto By: Rawich

According to the article on The Australian, the reintroduction of fuel indexation will result in $250 million in revenue in the 2014–15 FY, and approximately $2.4bn over the four year period.

For common petrol users, the increase in fuel tax means that it will cost about 50c extra to fill a tank for a small motor vehicle in the first year rising to about $2 a tank after four years.

This equates to about $26 a year for a family that filled their car up once a week in the first year but it will increase to more than $100 a year in the fourth year.

The news for reintroduction of fuel indexation did not sit well with motoring groups who warned the Government that it will face a massive backlash if it decides to increase the fuel tax.

Australian Automobile Association Chief Executive Andrew McKellar said a rise in fuel taxes would be a breach of the Government’s election promises and a hit to motorists.

“We are very concerned. A hike in fuel taxes at this point is completely unjustified. Motorists are already paying too much tax. I think there is a real comparison between this issue and the carbon tax. The ­previous Government (chose) to exempt household purchases of fuel,” Mr McKellar said.

“So for this Government to be applying a new tax on fuel seems to be completely contradictory.”

Australian Trucking Association Communications Manager Bill McKinley said a rise in the fuel excise will not reflect to grocery prices, as trucking companies have received a rebate on fuel excise on any tax paid above a road user charge determined by the National Transport Commission.