Howard to increase petrol tax From: By Heath Aston
September 20, 2005
John Howard / John Feder John Howard ... under intense pressure to cut petrol excise.
PETROL excise is set to rise from January 1, hurting cash-strapped motorists even further. The "capped" 38c-a-litre petrol excise will funnel revenue straight to wealthy petrol companies to subsidise environmentally friendlier fuels.
The scheduled increase - first announced when petrol was just 90c a litre - will go ahead despite motorists now being paying more than $1.30 a litre.
In a blow to truckers and farmers, diesel excise will also be raised from January 2007.
An Australian Taxation Office memo obtained by The Daily Telegraph shows preparations are under way to sell the "Cleaner Fuels Grants Scheme" to motorists and industry.
The scheme, conceived by Treasury in 2003, is designed to encourage oil refiners to supply low-sulphur fuels.
In 2003 the Government said the estimated rise in excise would be 0.6c per litre on all petrol - or about $120 million a year - and 0.7c on all diesel to subsidise extra refining cost of around 1c a litre.
The extra revenue will come on top of the $1 billion GST bonanza the Government will reap this year from soaring petrol prices.
ATO assistant commissioner of excise, Beth Barry confirmed the changes were on the table and would run for two years from January 1.
"The raising of the excise duty provides funding to allow a grant to be paid to support the introduction of cleaner fuel standards in Australia," Ms Barry said.
The initiative encourages manufacturers and suppliers to upgrade facilities and produce petrol with 50 parts per million or less of sulphur.
"This arrangement will be extended to diesel from 1 January, 2007," the memo said.
Prime Minister John Howard is under intense pressure to provide relief by lowering excise. Mr Howard and Treasurer Peter Costello have painted their decision to cut 1.5c a litre from fuel excise and cap it at 38c a litre.
The Government, oil companies and the ACCC have all declined to attend a summit on petrol prices later in the week.
ACCC boss Graeme Samuel - who last week said there was "something funny" about fuel prices - yesterday rejected calls for a broad inquiry into spiralling petrol prices.
He said there was no evidence of "unconscionable conduct" by refiners.
"Given that petrol prices in Australia are reflecting international factors and are being set according to international benchmarks it is highly unlikely that any particular sale of petrol at these internationally determined prices would be held by a court to be one party taking advantage of another and therefore unconscionable conduct under the TPA," Mr Samuel said.
