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22 cents a litre: Why we shouldn’t extend the fuel excise tax

·2-min read
Money and petrol prices
Petrol prices have fallen in the bigger cities, but regional areas are missing out. (Source: Getty)

The Labor Government is under pressure to extend the fuel excise tax cut although one expert has argued some retailers are unfairly benefiting from the halved tax.

In May, the tax was halved temporarily, from 44 cents a litre to 22 cents a litre, by the former government to ease soaring fuel costs caused by the conflict in Ukraine.

The Opposition has been calling on the Labor Government to extend the tax cut beyond its September expiry, in light of surging inflation.

Speaking to reporters on Tuesday, Treasurer Jim Chalmers dismissed calls to extend the fuel tax reduction given the Government was in $1 trillion in debt.

“We've made it clear for some time now that it would be too expensive to continue that fuel excise relief indefinitely,” Chalmers said.

He said it would cost $3 billion to extend the tax cut by six months.

Fueltrac cofounder Geoff Trotter also said some retailers had not been passing the fuel excise tax cut on to customers, especially in the regions.

He also said diesel prices had remained needlessly high.

Outside the larger cities, which had seen reductions in petrol prices, Trotter said retailers had been pocketing “huge margins” by not passing on the tax, nor the falls in international oil prices.

Since a peak in mid-June, global oil prices had been falling, which was translating into lower prices in Sydney, Melbourne, Brisbane, Adelaide and Perth where there was still competition.

Trotter said competition had virtually disappeared outside the capital cities.

He said diesel was particularly concerning because it flowed directly into the consumer price index (CPI).

“Because not only is it at the pump, but it also flows through to all the distribution costs for food and goods and so on,” he said.

Trotter said if the Government chose to extend the fuel excise tax, it would mostly continue to benefit the retailers that were failing to pass on the tax reductions and falling wholesale prices.

Keeping your petrol costs down

Joel Gibson from One Big Switch offered a couple of tips for motorists keen to keep their costs down:

  • Use fuel price apps to compare petrol prices in your area. These apps include FuelMap, EzySt, FuelCheck and Motormouth. A 28-cent difference between the cheapest and most expensive fuel in one city is not uncommon.

  • Explore discount schemes via supermarkets, motoring clubs and gift cards.

  • Drive less, if possible. You might even consider selling a car, with used car prices soaring by as much as 65 per cent.

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