Government banks on fuel excise

THE Australian government apparently is not expecting alternative energy vehicles such as electric cars to slice into its fuel excise revenue any time soon, with budget forward estimates predicting fuel tax income to creep up over the next four years.

Prepared by Treasury, the figures suggest the government is expecting about an extra $1 billion in petrol excise by 2020-21, along with about $2 billion more from diesel in the same time frame.

However, the four-year 19.3 per cent fuel excise windfall also reflects increases in the excise slug in line with the consumer price index (CPI) under a system introduced in 2014.

The excise currently stands at 40.1 cents a litre for petrol and diesel, while liquid petroleum gas (LPG) is taxed at 13.1 cents a litre. The excise on all fuels is adjusted against the CPI twice yearly, in February and August.

Beyond 2020, most major motor manufacturers are planning mass-selling electric vehicles (EVs) in a move that could impact fuel excise revenue as motorists increasing plug in rather than pump.

This could blow a large hole in federal revenues and require the government to re-think the way it taxes motorists to raise money for roads and related infrastructure and services.

In the current financial year, the government is expecting $6.1 billion in petrol excise – slightly down on the $6.15 billion last financial year – along with $10.23 billion in diesel excise, up from $9.72 billion in 2015-16.

Next year, petrol revenue is expected to climb to $6.25 billion, while diesel is predicted to deliver an extra $200 million into federal coffers, at $10.63 billion.

Both fuels are then forecast to deliver steady rises each year out to the budget estimate horizon of 2020-21 when petrol is expected to deliver $7.15 billion and diesel $12.33 billion