FEDERAL BUDGET: Excise revenue tipped to rise

Fuel excise revenue fell this financial year, but Budget banks on diesel consumers to give it a boost

By Brad Gardner | May 12, 2010

Revenue from the fuel excise fell on the back of the global financial crisis, but the Rudd Government is banking on diesel consumers to give it a boost next financial year.

Budget papers show the Government collected $15 billion in fuel excise this financial year, down $700 million from the previous year.

According to the budget papers, there was less demand for diesel from significant consumers such as the mining and manufacturing sectors due to a slowing economy.

The Budget is forecasting a $15.16 billion in revenue from the excise in 2010-2011, with the rise attributed to diesel.

"In 2010-11 diesel excise estimates are expected to increase by 1.2 percent compared with 2009-10 while petrol excise is estimated to decline by 2.2 percent," budget papers say.

"The trend toward the use of more environmentally friendly fuel sources and the purchase of more fuel efficient vehicles by consumers is anticipated to detract from demand for petrol into the future."

The diesel excise alone contributed $6.49 billion to government coffers in 2009-10 and is tipped to increase to $6.57 billion in 2010-11.

But the Budget forecasts a more than $1 billion decline in revenue from the diesel excise between 2010-11 and 2012-13 if the Government’s emissions trading scheme is introduced in late 2012.

The fuel excise is projected to fall to $12.8 billion over the same period due to the scheme.

"Petrol and diesel excise fall in the projection years as excise rates are cut as part of the compensation arrangements for the introduction of the Carbon Pollution Reduction Scheme," budget papers say.

Under the CPRS, the Government will cut one cent from the fuel excise for every one cent rise in the cost of fuel due to emissions trading. The move will run for one year and is designed to give the trucking industry time to adjust to a greener economy.

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