Aussies pay $30 a tank of petrol in taxes, but PM yet to drop excise

As fury mounts over spiking petrol prices, Scott Morrison is facing pressure to tweak a tax that costs you $30 per full tank.

Prime Minister Scott Morrison is gouging $30 in petrol taxes every time you fill up a petrol tank but has cautioned motorists that slashing the excise won’t stop prices rising, as a result of the war in Ukraine.

Amid anger over the cost of filling up a tank rising to a high of up to $200, the Prime Minister is under pressure from state premiers and Coalition backbenchers over the price of petrol.

Mr Morrison has refused to rule in or rule out the major move of cutting the petrol excise – leaving the door open to tweaks in the March 29 budget – but has poured cold water on any big changes.

“I think Australians know that what’s happening with petrol prices at the moment is being caused by what’s happening with the war in Europe,” Mr Morrison told Channel 9.

“And so we’re working with other countries around the world at the moment in terms of releasing fuel reserves to try and alleviate the pressure on fuel prices.”

However, petrol prices were steadily rising before the outbreak of war in Ukraine.

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Prime Minister Scott Morrison has refused to say if he will make any moves to bring down petrol prices. Picture: NCA NewsWire / Flavio Brancaleone

Asked if he would make any fuel tax changes in the March 29 budget, the Prime Minister refused to say.

“No, the answer is the Budget is at the end of this month. But my point is that excise, where it is at, is not going to change what the fluctuations are in price. I mean, we’ve seen it going from, you know, $1.70 to $2.20.

“So the things we can do, we do, and the things we can’t do anything about, well, we understand them and work with other countries around the world to try and relieve those pressures.”

There’s a couple of options the Prime Minister could consider if he wanted to ease costs, including temporarily pausing the fuel excise, which is due to rise in August.

Firstly, excise rates on fuel and petroleum products (other than aviation fuels) are indexed twice a year in line with the consumer price index (CPI) – generally in February and August.

So the Morrison Government could choose to take some temporary action to provide fuel tax relief.

But given the last indexation change saw fuel go up by 0.9 cents a litre – about 55 cents on a tank fill up – any changes there will have limited impact.

Automatic indexation of fuel excise was reintroduced by the Australian Government on 1 July 2015 after John Howard famously cut fuel excise in a desperate move to win the 2001 election after the introduction of the GST.

Any changes to the GST on petrol would need to be done in consultation with the states that secure the GST after the Commonwealth collects it.

Petrol prices across Sydney are up over 2 dollars a litre. Pictured is Shell on Alison Road in Randwick Picture: David Swift

Drivers are slugged about $30 per tank in fuel excise costs. Picture: David Swift

“These premiers who are out there sort of playing pretty cheap politics with all of this. They’re very silent on the fact that they collect the GST revenue from fuel taxes,’’ managing director at Australian Automobile Association Michael Bradley told news.com.au.

“So if (SA Premier) Steven Marshall and his ilk really wanted to be helpful, they can take four and a half cents a litre of petrol price today just by waiving the tax on a tax and the double dipping.

“Nobody likes high petrol prices, but there’s no sort of money tree in Canberra. Cost of living is red hot and people want to do something about it. But I also think that both sides of politics are going to be out there promising new roads and railways and public transport spends all of which have to be paid for by fuel excise. You can’t have it both ways.”

Some Liberal frontbenchers including Angus Taylor have already suggested fuel tax relief is off the table and “it’s not something we have in our plans”.

“The excise is used to fund road spending,’’ Mr Taylor said last week. “When I drive around during the floods I see how much work has to go into our roads. That has to be paid for.”