Tax windfall for Anthony Albanese and Jim Chalmers as excise rises on fuel, beer and spirits due to indexation

Motorists who don’t own an electric vehicle have just been hit with another excise hike — as have drinkers who prefer a beer or Bundy over wine — in a tax bonanza for Labor.

The Albanese government will reap billions of dollars from extra tax on fuel, beer and spirits – including a 1.8 per cent hike this week – while sparing Tesla owners and wine drinkers.

The cost of filling the car or buying a schooner rose again on Monday due to twice-yearly indexation of excise, triggering growing calls for Labor to stop taking money away from battling households.

National Seniors Australia CEO Chris Grice said the automatic increases to fuel prices linked to the Consumer Price Index (CPI) were cutting into his members’ standard of living.

“It has a tangible impact on what they can and can’t do each week,” Mr Grice told The Telegraph.

Petrol excise was halved to 22.1 cents a litre for six months by the former Morrison Coalition government to temporarily ease cost of living pressures.

PM Anthony Albanese speaks to Labor caucus in Canberra on Monday. Picture: NCA NewsWire

On Wednesday, it rose 0.8c a litre to 49.6c/L – after a 1.1c/L in August last year.

Electric vehicles (EVs) such as Teslas do not attract excise.

A growing number of politicians are driving EVs funded from the public purse.

One of the first to get behind the wheel of a taxpayer-funded Tesla was federal Climate Change Minister Chris Bowen.

But Mr Grice said it was hard for retirees to upgrade to EVs.

And he argued that raising fuel excise in line with the CPI was adding inflationary pressure.

In a submission to the 2024-25 Budget process, the Australian Automobile Association notes petrol and diesel excise is expected to raise $16.9 billion in 2026-27, nearly $3bn more than last financial year, “despite predicted rapid update of EVs.

“While the proportion of people paying fuel excise is falling, their collective tax bill is increasing,” the AAA said. “In general, people with lower incomes and regional Australians will be paying more than those on higher incomes and in capital cities.”

Car registration data shows Tesla ownership is heavily concentrated in just three council areas in NSW: City of Sydney, Northern Beaches and Ku-ring-gai.

Canberra anticipates excise on spirits will reap more than $4bn in 2026-27 compared to less than $3.4bn last financial year.

Chris Grice, National Seniors Australia CEO said it impacts the quality of life of his members. Picture: Supplied

Prime Minister Gillard's former Chief of Staff Amanda Lampe, who now chairs Bundaberg called for the excise to be scrapped.

Out of a total price of $61.95, for a bottle of Bundaberg Rum, nearly $38 is now excise.

“This system wasn’t created by this government but it is absolutely in the power of this government to do something about it,” Bundaberg chair Amanda Lampe, who was chief of staff to former Labor PM Julia Gillard, told The Daily Telegraph.

“Freeze the excise tax on spirits and beer,” Ms Lampe said.

Beer excise is forecast to rise from less than $2.6bn last financial year to $3bn by 2026-27.

“We’d all love it to be lower, but at the moment, we are just calling for a stop in the increases,” said Brewers Association of Australia John Preston.

Excise does not apply to wine and tax revenue from wine sales is expected to grow much more slowly.

Treasurer Jim Chalmers said his job was to make the budget add up. Picture: Valeriu Campan

By contrast, tobacco excise goes up twice a year in line with average earnings, with the next increase due on March 1. On top of this, Labor added a five per cent annual hike in tobacco excise last September.

Income tax earnings brackets aren’t indexed either, which nets Treasury billions of dollars through bracket creep as workers’ pay rises. Other countries such as the US and Canada index earnings brackets.

Independent MP Dai Le, who holds the western Sydney seat of Fowler, said indexation of fuel and other items should be stopped to help with the cost of living.

“I call on the government to freeze the indexation of insurances, university fees, and on petrol and all the things people need,” she said.

“With the cost of living, the people of Fowler in western Sydney are doing it really tough.

“They’re under stress, and they’re paying more for everything,” Ms Le said.

Independent MP for Fowler Dai Le wants fuel indexation cut. Picture: Damian Shaw

Treasurer Jim Chalmers said: “I listen respectfully to suggestions made to us by crossbench colleagues and industry groups but my job is to make the budget add up at the same time as we roll out billions of dollars in cost of living relief in other ways, including energy bill relief, cheaper childcare and medicines, rent assistance and bigger tax cuts for more people in Fowler and right around Australia.”

Nationals leader David Littleproud conceded the Coalition made a “mistake” in not cutting taxes on alcohol when they were in power.

Nationals leader David Littleproud in Canberra on Monday. Picture: NCA NewsWire

He said that the Morrison government got it wrong by not addressing the problem before the election.

“We should have done something when we were in government,” he told Nine on Sunday.

“We looked at it and we paused the action that we were going to take. And I think that was a mistake.”

The Morrison government had planned to cut taxes on beer in its final budget before the election but abandoned the plan amid criticism from the spirits industry.

“I think we’ve got to be careful with this and I think there is a case for us as legislators to look at it and at least put a freeze on it, to let things catch up for a while,” Mr Littleproud said.