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Motorists tipped to wear some budget pain

Fuel’s gold: An expected three-cent-a-litre rise in the 38.14 cent-a-litre fuel levy will raise an extra $1 billion in revenue a year for the government’s coffers if it is confirmed in tonight’s budget.

Expected increase in federal fuel levy to raise $1bn in revenue

13 May 2014

MOTORISTS are expected to wear some of the pain – and some of the gain – of tonight’s federal budget, with earnings from a hike in fuel excise likely to be tipped into a bigger spend on the nation’s roads.

The Coalition government is tonight due to hand down its first budget since being elected to power in September last year, with Prime Minister Tony Abbott saying he wants to be known as the “infrastructure prime minister”.

The federal government has already committed to several big roads projects, including Melbourne’s $6 billion East-West Link and Sydney’s $10 billion Westconnex project, with more expected to gain taxpayer support using funds drawn from the fuel levy.

However, the federal government is also planning to give states and territories an extra 15 per cent of the value of assets to spend on new infrastructure such as roads as long as they sell off those assets, and tie the projects in with the private sector.

The fuel levy expected to rise tonight was set at 38.14 cents a litre after former coalition Prime Minister John Howard locked it in to quell public revolt following the GST’s introduction to Australia in 2001, and its potential impact on fuel prices. However, while fuel prices have continued to rise since the GST’s introduction, the fuel excise has remained constant.

If, as expected, the levy rises by three to five cents a litre, the federal government will reap at least an extra $1 billion a year on top of the $14 billion a year it already collects from motorists each year.

However, the government has flagged that it also plans to review the fuel levy twice a year, spelling out the potential for even more pain at the pump if it keeps pace with inflation.

The Victorian Automobile Chamber of Commerce described the expected lift in the fuel levy as a penalty for using vehicles.

“Fuel excise is currently collected by the federal government at a rate of 38.14 cents per litre, however the impost on motorists is compounded by an additional 3.8 cents per litre (of) GST on top of the fuel excise – effectively a tax on a tax,” the chamber said in a statement.

The full details of the federal budget will be released by treasurer Joe Hockey tonight.

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