Motorists Hit With Highest Ever Petrol Tax Indexation Increase


The Australian Automobile Association has today expressed anger and disappointment over the Government’s decision to go ahead and impose the full indexation increase on petrol tax tomorrow.


AAA Executive Director, Lauchlan McIntosh, said today that the Government was guilty of blatant profiteering at the expense of motorists. He said the decision to implement the full indexation increase meant motorists would be hit with the largest indexation increase since 1983 when indexation of fuel was introduced.


"Tomorrow’s 1.525 cent excise increase is three times the average of half-yearly increases since 1983 and easily breaks the previous record of 1.34 cents in August 1994. Ironically that increase came at a time of high inflation. Tomorrow’s record increase comes at a time of low inflation.


"And in addition to the excise rise of 1.525 cents per litre there will also be an increase of 0.152 cents per litre in GST. The extra 1.67 cents per litre means motorists will be paying an additional $568 million per year in tax," Mr. McIntosh said.


"The decision to impose the full indexation increase also means that the Government has, for a second time, broken its promise that petrol would not rise as a result of the GST. Of the 1.525 cents, approximately 1.1 cents is as a direct result of the one-off GST inflationary spike in the September quarter and at the very least the Government should have removed that GST-related spike.


"Before the GST came in motorists were paying a total of 44.2 cents per litre in fuel tax. Tomorrow, based on a price of 98 cents per litre, they will be paying 48.54 cents per litre tax (39.64 cents excise and 8.9 cents GST).


"While the Commonwealth cannot control world oil prices it is misleading in the extreme for the Prime Minister and Treasurer to argue that tax has not pushed prices up. Before the GST the Commonwealth was retaining 36.2 cents per litre in excise – from tomorrow they will retain 39.64 cents per litre (plus the GST).


"The Prime Minister says he’s willing to wear the electoral fallout of this issue. I doubt his marginal seat holders will be as happy. It is an issue that will continue to haunt the Government. Motorists are very angry. The motoring clubs have been inundated with protests from their 6.4 million members.


"Tragically this is an issue the Government could easily have avoided if it had been honest with motorists in July and reduced excise by ‘an amount equivalent to the GST’ as promised by both the Deputy Prime Minister and the Treasurer," Mr. McIntosh said.

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