Motorists could be slugged with a petrol price rise of up to three cents a litre as the Abbott Government considers increasing fuel excise for the first time in more than 10 years.
The excise, which reaps the government 38.1 cents per litre, has been frozen since 2001, when the Howard government ceased indexing it to inflation.
That decision, made in the wake of popular opposition to the introduction of the GST, has been a key contributor to a shortfall in revenue that many economists say has contributed greatly to the current difficult budget position.
But Treasurer Joe Hockey is reportedly considering raising the excise by up to three cents a litre, or even reinstating indexing of the charge, as part of Tuesday night’s federal budget.
The ABC is reporting that it has confirmed the decision to raise the levy in the budget.
The decision would be popular with economists and treasury officials who have long urged action on the change but would be unpopular with an electorate already growing angry at the Abbott Government over mooted austerity measures in the coming budget, led by a controversial and promise-breaking “deficit levy”.
The excise change has reportedly been roadtested with senior ministers in the leadup to the budget and mentioned during consultations with stakeholders but it is not known if a final decision has been taken.
Prime Minister Tony Abbott ran through some of the budget’s likely measures for his cabinet colleagues on Wednesday and emerged saying that all Australians would have to share the pain of a belt-tightening budget.
“I’m going to be able to look people in the eye on Tuesday night and on Wednesday morning and beyond and say we are all in this together,” Mr Abbott said. “We are all doing our bit.”
It is believed a three cent a litre rise in petrol excise would deliver more than a $1 billion to the budget bottom line but would likely be met with outrage from motoring groups.
Mining companies, which receive a generous rebate on the excise already, would likely not be touched by any increase.
