Australia’s fuel excise is close to hitting 50 cents per litre following the Federal Government’s latest increase to the tax on petrol and diesel products.

Every six months, the government automatically re-indexes the excise rate in line with the consumer price index (CPI) as determined by the Australian Bureau of Statistics.

This biannual indexation is nothing new – it’s been happening since it was reintroduced in 2015 – but for consumers already facing a price pinch at the bowser, you might be wondering what this will mean for fuel prices going forward.

Here’s what you need to know.

How much is the fuel excise in 2024?

The latest fuel excise rise takes effect on Monday 5 February 2024 and sees the excise rate increase from 48.8 cents per litre to 49.6 cents per litre.

While 0.8 cents is by no means a dramatic rise, the latest increase will mean close to $40 in total excise costs per tank for a large SUV with an 80-litre fuel tank.

“As of today, at an national average retail price of 197.2 cents per litre, we’re paying 49.6 cents per litre in fuel excise and 17.9 cents per litre in GST – so roughly 67.5 cents a litre, or 34 per cent of the average retail price, in federal government taxes,” explained Mark McKenzie, CEO of the Australasian Convenience and Petroleum Marketers Association (ACAPMA).

“So the government is taking just over a third of the price we pay at the pump.”

Excise cost per tank (before 5 February 2024)Excise cost per tank (from 5 February 2024)
Kia Picanto – 35-litre tank$17.08$17.36 (+$0.28)
Toyota RAV4 Hybrid – 55-litre tank$26.84$27.28 (+$0.44)
Ford Ranger – 80-litre tank$39.04$39.68 (+$0.64)
Nissan Patrol – 140-litre tank$68.32$69.44 (+$1.12)

While this might sound like a lot, the proportion of fuel excise Australians pay hasn’t changed much in the last decade, and is actually low when compared to other OECD countries.

Australia actually has the third lowest proportion of fuel taxes of all OECD countries, with Denmark topping the list in the June quarter of 2023 – with almost half of its fuel prices made up of taxes.

The latest excise rate, however, might feel like a far cry from March 2022, when the Morrison government cut the fuel excise in half, dropping it from 44.2 cents to 22.1 cents per litre for a period of six months.

This move was unprecedented and made in response to significant uncertainty created by Russia’s invasion of Ukraine and the resulting war, a cause for concern given Russia accounts for roughly 10 per cent of the world’s oil production.

How does the fuel excise work? Where does the money go?

The fuel excise is a flat tax levied on every litre of petrol or diesel sold to Australian consumers, and the proceeds go toward maintaining and developing infrastructure and roads throughout Australia.

The excise is just one of the major components that influence the price you, the consumer, sees at the petrol pump.

According to a spokesperson for the Australian Competition and Consumer Commission (ACCC), there are three broad components of average retail petrol prices:

  • The international benchmark price of refined petrol – which is largely driven by international crude oil prices and the AUD-USD exchange rate
  • Taxes (excise and the goods and services tax)
  • Other costs and margins, at the wholesale and retail levels

In addition to the fuel excise, the Goods and Services Tax (GST) is also levied on the retail price of fuel (inclusive of the excise) at the standard rate of 10 per cent.

As a result, many have argued that the fuel excise is a ‘tax on a tax’.

“It’s a clear double dip by the Federal Government, as it also applies GST. It’s no wonder Australia has sky-high fuel prices,” argued Geoff Gwilym, CEO of the Victorian Automotive Chamber of Commerce.

However, the fuel excise is a big earner for the Federal Government.

According to the 2021–22 Federal Budget, the fuel excise was forecast to collect $13.9 billion in 2022–23, and this was projected to increase to $16.65 billion in 2025–26.

Who pays the fuel excise?

“The fuel excise is paid by the big fuel suppliers and that cost is passed through the chain to fuel retailers and their customers at the pump,” Mr McKenzie explained.

This means each time the fuel excise increases, it is passed on to consumers directly and immediately – but in some instances you might see some savings on leftover fuel delivered before the increase took effect.

“The excise point is at the refinery or the fuel depot,” Mr McKenzie explained.

“So the fuel that is already in the ground at service stations – that was distributed before midnight last night – will not be subject to the higher excise straight away and retailers might take advantage of that and discount it to become more competitive.”

Excise cost per year
Kia Picanto
Fuel claim: 6L/100km combined cycle
Toyota RAV4 Hybrid
Fuel claim: 4.8L/100km combined
Ford Ranger
Fuel claim: 7.2L/100km combined
Nissan Patrol
Fuel claim: 14.4L/100km combined

Based on average fuel consumption distance travelled of 15,000km per year.


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