[anthony2302749]

Hi

I thought I would wade into this discussion about petrol, but before I open my mouth I did some research into the topic and came up with some very interesting information some of which I have posted below. It looks that tax on fuel has been around since before Federation. Historically speaking, the excise was imposed to raise revenue for transport infrastructure. In more recent times the excise has become a source of general revenue.

For further reading follow the link http://fueltaxinquiry.treasury.gov.au/content/Submissions/Government/Treasury_326.asp


1.2 History of petroleum product taxation
Prior to Federation customs and excise duties were the main forms of tax revenue available to the Colonies. At Federation section 90 of the Constitution gave exclusive power over customs, excise (and bounties) to the Commonwealth. During the first three decades of Federation all petrol used in Australia was imported and as a result only customs duty was collected on petrol. It wasn't until 1929, when domestic refineries began production, that excise was first levied on petrol.
Up until 1926, customs duty on petrol was used as a general revenue raising tax. In 1922 the Commonwealth started providing grants to the States for a number of purposes including road development. The first specific road funding legislation was introduced in 1923 (the Main Roads Development Act 1923). During the period from 1926 to 1959 there was formal hypothecation of petrol excise and customs duty for Commonwealth roads grants to the States.
In September 1957, due to the increasing use of diesel powered vehicles, excise was first applied to diesel3. The original diesel rate was marginally higher than the petrol rate of that time4. At the same time that excise was applied to diesel, a diesel rebate scheme for off-road users was introduced. As petroleum excise was hypothecated to road funding, the scheme effectively allowed for a full rebate of the excise paid for all off-road use of diesel,5 which remained the case until 1982.
In 1959, the formal hypothecation of petroleum excise to road funding was abandoned. The rationale behind this decision was that the practice of designating the proceeds of a tax for a particular purpose was unsound from a finance policy perspective, primarily as it restricts a Government's budgetary flexibility to direct revenue where it is most needed. Consequently, since 1959 petrol and diesel excise have been imposed as a means of raising general government revenue.
From 1959 to 1982, excise on petroleum products was subject to a number of discretionary increases in response to budgetary needs. This included the Australian Bicentennial Road Development program, initiated in August 1982, in an attempt to increase road funding after wide spread criticism over falling road funding since the late 1970s. As part of the program the revenue collected was paid into the Australian Bicentennial Road Fund which was used to provide grants to the States for road construction.
On 22 August 1983 the Government announced that excise would be subject to twice yearly indexation to increases in the Consumer Price Index. The rationale behind this measure was to maintain the real level of revenue. Rebates for off-road diesel use were not adjusted and remained at 7.055 cents per litre (cpl)6. In conjunction with this, excise was also introduced on fuel oil, heating oil and power and lighting kerosene.
From March 1986 to December 1987, there was a significant increase in excise collections due to the link between the petroleum excise and crude oil levy collections. This included a 3 cpl increase in petrol excise in the August 1986 Budget, to offset reduction in Commonwealth revenue due to the fall in the price of crude oil as a result of the collapse of the OPEC oil cartel. On the removal of import parity pricing in December 1987, the excise on petrol and diesel had increased by around 10 cpl.
Again, from 1988 to August 1993, the increases in excise rates on petroleum products were solely a result of indexation7. In the August 1993 Budget the Government announced it was imposing an immediate 3 cpl increase on the excise on all petroleum products except aviation gasoline and aviation turbine fuel. The Government also announced it would increase excise by 1 cpl on most petroleum products in February and August 1994, in addition to indexation. After negotiations with Senator Harradine and Western Australian Green Senators, the Government agreed that the latter adjustments would only apply to petrol and diesel. In conjunction with this, an additional 1 cpl was levied on leaded petrol in February and August 1994 in order to reduce the use of this fuel, which was the first time excise was used to address environmental externalities.