NewsBite

Federal Budget 2014 expected to include increase in fuel excise

MILLIONS of motorists could soon be paying more for petrol if the federal government decides to increase the fuel excise in next week’s budget.

Petrol prices are likely to increase as a result of next week’s budget.
Petrol prices are likely to increase as a result of next week’s budget.

MILLIONS of motorists could soon be paying more for petrol if the federal government decides to increase the fuel excise in next week's budget.

The government is considering lifting the 38.1 cent per litre excise by three cents, which could bring in $1 billion in revenue a year, News Corp Australia reports on Thursday.

The excise has been locked at 38.1 cents since the Howard coalition government froze automatic indexation in 2001.

If it goes ahead, the rise will come on top of the coalition's mooted plans to impose a debt levy on higher income earners, most likely those on more than $150,000 a year.

A number of coalition MPs oppose the impost, saying it would mean the government will have broken a pre-election promise not to introduce new taxes.

But Treasurer Joe Hockey rejects this, saying it wouldn't be a broken promise because the coalition had before the election announced plans to make big businesses pay a levy to support Prime Minister Tony Abbott's $5.5 billion a year paid parental leave (PPL) scheme.

“We went to the last election promising to introduce a levy for PPL so claims that we said we would never introduce new taxes are just wrong,” he told The Australian Financial Review.

Several opinion polls released since last week show significant community opposition to a debt levy.

Treasurer Joe Hockey will deliver his first budget as treasurer. Picture: Norm Oorloff
Treasurer Joe Hockey will deliver his first budget as treasurer. Picture: Norm Oorloff

However, Deloitte Access Economics' Chris Richardson says a levy would show the government is serious about repairing the budget deficit.

The government could also save $280 million from the closure of six more detention centres across the country in 2015.

The Northern and Darwin immigration detention centres in the Northern Territory could close by midyear, along with the Curtin Detention Centre in Western Australia, according to media reports. The Inverbrackie centre in the Adelaide Hills and two sites on Christmas Island could be shut by year-end.

Meanwhile, an additional $2 billion in funding could be used to fast-track the construction of Sydney's WestConnex road project linking the city's west to the CBD and the airport, the ABC reports.

The funding would allow the NSW government to start building the project's first and second stages as soon as next year.

Tuesday's budget could also include a new $10 billion infrastructure package funded by a “special immediate measure” on high income earners, Fairfax Media reports.

The budget is expected to include a range of tough calls for high income earners and families.
The budget is expected to include a range of tough calls for high income earners and families.

Liberal backbencher Kelly O'Dwyer was tight-lipped on the deficit levy and fuel excise hike's inclusion in the next week's budget.

But, she said, tough decisions would be made.

“You do have to understand that nobody voluntarily performed open heart surgery unless it is necessary to do so,” Ms O'Dwyer told ABC TV.

Businessman Dick Warburton supports a deficit levy on the top two per cent tax bracket.

“This is a tax on people who can afford to (pay) it,” he told ABC radio.

The former Reserve Bank board member doesn't think the move will take that much money out of the economy.

He urged the government to examine industry assistance.

The Australian Greens said the government should be targeting the diesel fuel rebate that gives the mining industry billions of dollars in exemptions, instead of everyday motorists.

“Why is the government continuing to say: 'We'll allow Gina Rinehart and the like to get cheaper petrol but potentially make it more expensive for everyone else',” deputy leader Adam Bandt told ABC radio.

Mr Hockey has reportedly ruled out cuts to the diesel fuel rebate, which will cost $2.4 billion next financial year.

Originally published as Federal Budget 2014 expected to include increase in fuel excise

Original URL: https://www.adelaidenow.com.au/business/economy/federal-budget-2014-expected-to-include-increase-in-fuel-excise/news-story/a4fd987245d66430f4edcd727692f756