Other Fuels Excise

Excise on “Other Fuels”, and excise equivalent customs duty, is budgeted to raise $2 billion in 2018-19, and $8.6 billion over the forward estimates. It is our eleventh largest tax.

Other Fuels excise represents 0.4% of all Commonwealth revenue in 2018-19, and 0.1% of GDP.

Other Fuels covers all petroleum based products and petroleum-like fuels other than petrol and diesel. The main components are domestic aviation jet fuel, AVGAS, LPG, ethanol (domestic and imported), crude oil, and petroleum oils and greases.

Excise is not applied to any aircraft fuel intended for use in international flights. This accounts for just over half of all aircraft fuel.

Excise rates for Other Fuels are indexed twice yearly in line with movements in the consumer price index. GST of 10% is applied on top of the fuel excise.

You can choose:

• the rate of excise for:
  • aircraft fuels
  • LPG
  • domestically produced ethanol
  • a further subset of ‘Other Fuels’ which includes imports of ethanol, petroleum based oils and greases, and crude oil subject to the excise regime rather than the Petroleum Resource Rent Tax. This is a composite rate, and gives only a very broad indication of the impacts of changing quite a number of specific excise rates that apply across a wide variety of products.
• to apply excise to fuels used in aviation at the same rate as excise for fuels used for non-aviation purposes
• to change the method of fuel excise indexation. The model allows for no indexation (as was the case between 2001 and 2014), indexation based on CPI, or CPI plus 1%, 2% or 3% per annum.

The model does not take account of the impact of changes to fuel excise on GST (a reduction in the excise rate would lower GST collections, and an increase would also increase GST collections), nor of any other second round effects.

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