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Fuel Excise Indexation

Regulation Impact Statement – The Treasury

On 23 June 2015 the Government introduced a package of bills that reintroduced bi-annual indexation of fuel duty. At the time of the 2014-15 Budget announcement the duty rate for most fuels was set at 38.143 cents per litre. This rate was proposed to increase biannually with the Consumer Price Index. In the 2014-15 Budget this was estimated to increase Government revenue by $2.2 billion in the first four years, the cost of which would mostly fall on households and businesses using light commercial vehicles. Fuel used in heavy on-road vehicles and business off-road use will not bear the burden of any fuel excise increases because of these users’ entitlements to fuel tax credits. The RIS notes that due to the inelasticity of demand for most fuel products the effect on demand of an increase in the fuel tax is expected to be minimal. A Regulation Impact Statement for these changes was prepared and certified by the Treasury. The RIS estimates the changes increase regulatory burden by $5 million per annum. This estimate, as well as a regulatory offset, was agreed with the Office of Best Practice Regulation.