Fuel excise is a flat sales tax levied by the Australian Government on petrol and diesel bought at the bowser. The current rate is 49.6 cents in excise for every litre of fuel purchased.
The rate of fuel excise is adjusted in February and August each year in line with inflation and is in addition to the GST.
Over the past decade (up until 2022-23), only 57% of fuel excise has been re-invested in land transport projects. The AAA would like to see every cent of fuel excise re-invested into land transport projects.
All Australian motorists who buy petrol and diesel at the bowser pay 49.6 cents a litre in fuel excise. Separately, the owners of heavy vehicles – such as buses, coaches, and trucks – using public roads pay a Road User Charge for each litre of diesel they buy. The Government provides a rebate (tax credit) on the fuel excise to some industries, like mining and agriculture, as their vehicles don’t use public roads.
Owners of pure electric vehicles (or other zero emission technology vehicles that don’t use liquid fuels) don’t pay any federal fuel excise.
Australian motorists will pay more than $15.7 billion in net fuel excise this financial year, and $67.6 billion over the next four years (2023-24 to 2026-27), according to the October 2023 Federal budget. For a typical household, this year’s fuel excise bill will be $1,283.
As cars have become more fuel-efficient and new-zero and low-emission technologies (including electric vehicles) become more widespread, the amount of fuel excise collected by the federal government has been falling.
Unlike registration and driver’s licence fees, which go to state and territory governments, fuel excise is collected by the federal government.
Like almost all federal taxes, fuel excise goes into the Government’s general revenue, which is then drawn upon to fund our transport infrastructure. It’s the contribution that you, as a motorist, make to developing and maintaining our road transport system.
Net fuel excise to be collected will increase slightly over the next few years to about $17.7 billion in 2026-27.
While total Government spending over the next four years is high, this hides a forecast decrease in spending over the coming years. The proportion of excise returned to land transport infrastructure is forecasted to decrease to only 71% in 2026-27. All net fuel excise should be returned to the land transport network.