History of fuel taxation in Australia
Tax time is here again and while we’re looking around for every discarded receipt and long-forgotten invoice to complete our paperwork, it’s worth looking back at the history of fuel taxation in Australia. Fuel is a commodity that has been taxed in varying degrees since Federation, and each successive government has made changes and updates to taxation law that impact how we purchase and use fuel today.
In the beginning
The first fuel taxes were placed on diesel and petroleum imports, as there was no local production of these resources until 1928. After that point, however, excise duty was placed on locally-sourced petroleum products at the rate of 1 penny per gallon, which works out at about 0.18 cents per litre. An excise duty differs from a tax in that excise is placed at the time of manufacture instead of a sale. At any rate, this revenue raising by the government was in the name of funding the country’s fledgling road network.
A similar excise was placed on coal tar and coke oven distillers in 1931, as those resources were seen as a potential replacement for petrol. In 1940 an excise on heavy fuel oil was introduced as part of the country’s war-time financing requirements, along with an overall excise rate increase. However, the rate charged against shale and coal-sourced liquid fuel decreased in that year to encourage more production.
The fuel excise underwent an extensive revision in 1957 when diesel vehicle operators were also asked to contribute to the country’s road network expansion and maintenance. To offset this the first excise exemption was introduced, where only on-road uses of diesel fuel would be subject to the charge.
Enter the airlines
Around this time the government imposed a new duty on aviation turbine kerosene, regardless of its source of origin. This was in response to the booming aviation industry, which necessitated the development of new airports and routes around the country. Newer planes used aviation turbine kerosene while older ones relied on the already-taxed aviation gasoline. The connection between revenue raising in this sector and funding the aviation industry was formalised in 1995 when the financial requirements of the Civil Aviation Safety Authority and Airservices Australia determined the excise rates on aviation fuels.
The direct connection between taxing fuel used by road-using vehicles and funding the Australian road network was brought to a temporary end in 1959, on the reasoning that the tax was unfair to people who did not use the road network but still paid costs passed on by commercial transport operators, and that revenue raised should be available for any purpose deemed suitable to the government.
However, the link between fuel taxes and road funding returned with the Australian Bicentennial Road Department Trust Fund Act of 1982. It detailed a surcharge of 1 cent per litre on the excise of petrol and diesel, which was doubled the following year. This Act was replaced by the Australian Land Transport Development Act of 1988 which is still in place today.
In the years since the government of the day has set road funding as a separate item in their respective budgets, due in part to the need for relevant industries to know well in advance what funding will be allocated to new projects.
No matter what is happening with taxation, Bulk Fuel Australia is committed to providing a reliable supply of diesel fuel to every part of the country. Contact Bulk Fuel Australia today to see how we can keep you moving into the future.
