Petrol tax slug: Labor backs government’s twice-yearly petrol tax hike

Labor is backing the Abbott government’s reintroduction of a twice-yearly increase in petrol excise.

At a press conference this morning, Opposition Leader Bill Shorten confirmed Labor will back the petrol tax increase if $1.1 billion of the money goes towards regional roads.

The government had demanded Labor back the petrol tax increase or have the money collected from motorists over the past year refunded to big oil companies instead.

The measure was announced in last year’s budget but Labor voted against it at the time saying it broke the government’s promise not to introduce new taxes.

But Labor has now backed down and will support the petrol tax hike. 

“In a beauty parade, between giving money to oil companies and putting money back into Australian roads, generating jobs and confidence, it is clear which way Labor has to go,” Shorten said.

“If Labor didn’t compromise … all the money that Australian motorists had paid would go back to oil companies.”

The move is expected to deliver the budget $23 billion in revenue over the decade and $3 billion over the four year forward estimates period. 

Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany the petrol tax increase will hit small business.

“It will drive up costs for everybody but the only thing that is good about it is that it shares that right around,” he says.

Strong says he hopes the price increase is borne by big as well as small business.

“If you are a courier firm or transport company connected to Coles and Woolworths, we’d really have to cross our fingers that these costs are passed on,” he says.
He says the measure needs to be as fair for small business as for the big end of town.   

Indexation of the fuel excise was abolished by former prime minister John Howard in 2001 in response to rising fuel prices and voter anger over the introduction of the GST.

Since then, motorists have paid 38.1 cents per litre in fuel excise until the Abbott government reintroduced the excise through regulation in October last year.

But the increase had to be enshrined by legislation within 12 months or it was set to lapse.

Labor’s move has left the Greens out in the cold after the party last month offered to back the petrol tax increase as long as some of the revenue was funnelled into public transport.

SmartCompany contacted Small Business Minister Bruce Billson and Opposition Leader Bill Shorten for comment but did not receive a response prior to publication.