Businesses missed out on fuel tax relief

·2-min read

Businesses have largely missed out on fuel price relief from the halved fuel excise tax, with households benefiting more from the temporary cost-of-living measure.

This is a product of fuel tax design, according to a Parliamentary Budget Office explainer.

The Morrison government halved the fuel excise from March for six months in a bid to reduce pressure on the cost of living, but the excise will come back on next week.

While the temporary tax relief mainly flowed through to individual motorists, most businesses already pay less tax on petrol thanks to a fuel tax credit system that gives eligible businesses refunds.

Australia is also among the lowest petrol taxing nations in the OECD, the report says.

It comes in 12th lowest for fuel tax related to roads and ninth lowest for taxes on other fuel uses.

The nation's low tax environment can be partly explained by the lack of an explicit carbon tax component, the report says, which some other countries have.

The halved fuel excise tax is due to be reinstated in a little over a week, but prices are not expected to jump up straight away.

Regional areas could continue to benefit from lower-taxed fuel for several weeks, with city-based petrol stations likely to have to buy fuel at the higher price sooner than regional stations because of higher turnover.

The NRMA's Peter Khoury said motorists should not see an immediate increase, and his motoring organisation as well as the consumer watchdog would be keeping a close eye on the matter.

"It will take several days in the capital cities and possibly even longer - up to two weeks - in regional areas," he said.

"That is because service stations will already have existing stock before they go and restock fuel at the increased rates."

Treasurer Jim Chalmers said there would be more than 700 million litres of lower-excise fuel in the system when the excise is reintroduced, so the price should not shoot up immediately.

On Monday, the Australian Institute of Petroleum reported the national average unleaded petrol price fell by 0.9 cent a litre last week to a nine-month low of 163.5 cents a litre.

CommSec estimates it is costing the average family $228.90 a month to fill up the car, well below the record high of $297.50 a month in March.

Experts admit the key driver of bowser prices is the global oil price, which has been under pressure due to Russia's war in Ukraine.

Bowser prices are only likely to drop when the global price starts to stabilise.

Australia is supporting a price cap on Russian oil exports, which Dr Chalmers said would help address the problem.