Don’t fill up yet: Why petrol won’t be cheaper for 2 more weeks
Motorists have been advised to hold off on filling up because bigger petrol discounts are expected in coming weeks, thanks to cuts to the fuel excise tax.
The fuel excise tax was temporarily slashed last night as part of the Federal Government's response to rising living costs - including soaring petrol prices - outlined in the 2022 Budget.
Also read: Fuel tax slashed by 50 per cent
Also read: Save $14 at the bowser: How to find the cheapest petrol
Also read: $2 a litre: Petrol prices expected to jump as oil soars
The decision means the amount of tax drivers pay for fuel will be cut to 22.1 cents a litre, from 44.2 cents a litre, for the next six months.
It’s expected to save a family with two cars about $30 a week on average, Treasurer Josh Frydenberg said in his Budget speech.
While the cut came into force on Tuesday night, Frydenberg explained motorists would need to wait around two weeks for the savings to appear at the fuel pump.
That’s because the fuel excise is collected at the points of distribution from local refineries and importers, rather than at the petrol pump, so the savings will only start to flow through once fuel stations replenish their stocks.
Cities and petrol stations with high turnover - such as popular highway stops - are likely to see discounted fuel prices earlier because fuel stocks are replenished more frequently, according to the Australian Competition and Consumer Commission (ACCC).
It’s likely to take longer for the tax cut to translate to cheaper petrol in the regions, where lower volumes of fuel are sold and therefore replenished less frequently.
Motorists should wait before filling up
Compare the Market spokesperson Sarah Orr said motorists would be wise to hold off until the tax relief showed up at the bowser.
However, she said some retailers may start passing on discounts earlier.
“It's up to retailers now,” she said.
She recommended checking the available fuel price apps and resources to source the best deal.
Find out how you can source the cheapest fuel in your area
She said in Brisbane today, there was a 28-cent difference between the highest and lowest-priced fuel.
This amounts to a difference of $14 for a 50-litre tank of fuel.
The ACCC will be responsible for making sure the tax cuts are passed onto the customer and not withheld by the retailer.
“If retailers make false or misleading statements to consumers that they have passed on the savings when they have not, the ACCC will not hesitate to take appropriate enforcement action,” ACCC chair Gina Cass-Gottlieb said.
The drawbacks of cutting the fuel excise tax
While many motorists will welcome low fuel costs, some experts have criticised the excise cut as a political play ahead of the federal election.
University of Sydney commodities market expert Dr Elvis Jarnecic said the excise served a critical purpose in maintaining roads and related infrastructure.
“There's a clear relationship between a person using fuel and using and deteriorating roads, hence it's generally considered a reasonably fair user-pay tax,“ Jarnecic said.
Halving the tax for six months is expected to cost the Government $3 billion.
Jarnecic said there were a couple of important facts in play.
“The excise tax reduction is politically beneficial ahead of an election particularly, given rising fuel prices,” he said.
“Secondly, the reduction is short term during what are seen as temporary oil price pressures and, hence, the revenue impact should only be for a short period.
“In addition, this is a revenue stream that should reduce over time with the adoption of alternative energy sources, which means alternative means of funding will need to be found.”
He also said it would act as a disincentive to electric vehicle adoption.
Experts have also warned any kind of tax cut is extremely difficult to unwind, and that cutting the tax is a blunt instrument for relieving cost-of-living pressures that is not targeted to the people who need it most.
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