Fuel Taxes

Fuel Taxes

Publication date
Fuel Category
Fuel Location

Fuel Tax: AIP Policy Principles

From a tax policy perspective, AIP supports a fuel tax regime for transport fuels that:

  • is efficient (causes minimum distortions), equitable (fair) and simple (easily understood)
  • is practical/workable and minimises compliance and administration costs for business and government
  • supports clarity, consistency and stability in policy settings relevant to the transport fuels industry.

AIP also supports relief from the burden of fuel tax being provided for ‘business inputs’ to production, and has therefore supported the policy intent of the Fuel Tax Credits system.

Overall, AIP supports the principle that all fuel used for transport - including liquid fuels (mainstream transport fuels and biofuels) and gaseous fuels (LPG, LNG and CNG) - should be taxed on a comprehensive and neutral basis, to ensure the most efficient and robust fuel tax system for road transport fuels.

  • AIP supports all road transport fuels being brought within the fuel tax regime (as they are now) so that all fuels (equitably) need to meet compliance obligations underpinning the integrity of the fuel tax regime and also comply with relevant fuel quality and environmental performance standards.
  • AIP supports energy content as an appropriate and neutral basis for taxing all road transport fuels, and so as to not distort the allocation of resources and producer or consumer choices.
  • AIP supports the principle that the point at which fuel tax should be imposed should be at the highest point in the supply chain to ensure the most compliant fuel tax regime.

AIP recognises that a transition to this efficient fuel tax policy framework may be appropriate.

The 50% fuel tax concession for alternative fuels is inconsistent with AIP’s fuel tax principles above, and generates both a significant tax expenditure for Government in terms of foregone revenue and added complexity to the administration of the fuel tax regime for business and government.

AIP acknowledges that the Government may consider there is a case for assistance for alternative fuels.

However, AIP believes that such government assistance:

  • should be transparent (clearly defined objectives and a demonstrated net benefit)
  • should be regularly reviewed to ensure the objectives of assistance are still relevant
  • should allow for a sufficient transition period prior to an appropriate expiry date
  • could also address any adverse consequences for existing or committed projects arising from any fuel tax changes.

Fuel Tax: AIP Submissions

Various public submissions outlining AIP policy principles, analysis and views on Fuel Taxation can be found here.

Fuel Tax: ATO Guidance

The Australian Taxation Office (ATO) provides published guidance on excise as it relates to fuel products, including:

  • what excise is
  • an overview of excise legislation relevant to fuel
  • who administers excise, and
  • when you are involved in the excise system.

See http://law.ato.gov.au/atolaw/view.htm?Docid=SAV/FUEL/00001&PiT=99991231235958.

Fuel Tax: Current Excise Rates

For the current excise rates of conventional petroleum products (Petrol, Diesel, Jet Fuel) and alternative petroleum fuels (LPG, LNG, CNG, biodiesel, renewable diesel, fuel ethanol) see https://www.ato.gov.au/business/excise-and-excise-equivalent-goods/fuel-excise/excise-rates-for-fuel/ .

Excise rates on fuel and petroleum products (other than aviation fuels) are indexed twice a year in line with the consumer price index – generally on 1 February and 1 August.

For more information on fuel excise indexation, see https://www.ato.gov.au/general/new-legislation/in-detail/indirect-taxes/excise/reintroduction-of-fuel-excise-indexation/.

For more information on the current excise on biofuels, see https://www.ato.gov.au/business/excise-and-excise-equivalent-goods/fuel-excise/biofuels/.

For more information on the current excise on gaseous fuels, see https://www.ato.gov.au/business/excise-and-excise-equivalent-goods/fuel-excise/gaseous-fuels/.

Fuel Tax: International Comparison

A comparison of international petrol and diesel taxes and prices is available here here.

Fuel Tax: Policy Developments

Some additional fuel tax reference sources include:


Taxation of Alternative Fuels

Fuel Excise Reform