Paying tax twice at the petrol pump

MOTORISTS are currently paying as much as 37.7 per cent tax for every litre of petrol they buy, says the general manager of the Service Station Association (SSA).

Mr  Colin Long said heavy taxing on petrol has been a point of contention for years.  

“The public are taxed to the eyeballs on petrol, they always have been,” he said.

“The bone needs to be pointed at the government – at the stroke of a pen they could reduce the excise on petrol which currently sits at 40.1 cents per litre.”

NRMA spokesperson, Mr Peter Khoury, said motorists are double taxed on each litre of fuel they purchase.

Analysis of an average price of 140.3c a litre for unleaded petrol, shows 40.1c is automatically claimed by government excise.  Motorists are then paying the GST which gives the government another 12.75 cents. The higher petrol prices go, the more tax the government gets from GST.

“You’re paying tax on a tax,” Mr Khoury said. “The only products in Australia where you do this is cigarettes, alcohol and petrol.”

The excise was increased on February 1 and will rise again on August 1.

“The reason I guess is because the fuel excise – introduced to fund infrastructure, roads and transport – around the time of introduction of GST was capped. It was set at a price and was not meant to include CPI (Consumer Price Index) increases.

“But that cap was lifted by the federal government so that meant we’re paying CPI increases on the tax. The total amount is just going to keep going up and up.”

Mr Khoury would like to see the tax motorists pay on petrol – $16 billion in 2016 – directed back into improving the road network.

“Our position is that more of what the government collects from the excise should be used to improve the road network,” he said.

“The public understand they have to pay tax, and they understand if they want the road network improved there has to be a way for motorists to contribute to that. That tax is going into general revenue, and [only] some is going into the road network.”

Are you paying too much at the pump? Let us know at grace.ryan@fairfaxmedia.com.au