Extra fuel savings on the way after states end feud
Motorists will get an extra 5.7 liters off their fuel bills after the states and territories resolved a dispute over how the expected GST will be refunded to consumers.
The reduction will be added to the temporary reduction of 26.3 liters announced by the federal government on Monday and will last until June 30.
The extra addition by states and territories appeared doubtful after a dispute between Queensland and Victoria and other states over how to return an expected $400 million in extra GST revenue to consumers.
The 10 percent GST, called value added tax, is applied separately to the 52.6 billion liters of consumption tax collected from fuel.
Fuel excise tax does not increase or decrease with the price of oil, but GST revenue increases in line with the price of fuel, which has increased by up to 60 percent since the beginning of the Iran war.
Queensland Treasurer David Janetzki has previously opted for cost-of-living measures targeted at those who need it most, rather than a blanket cut for all fuel users.
But at a meeting of the Australian Federation Council on Thursday they agreed the revenue would be returned to the Commonwealth, which would reduce consumption duty by a further 5.7 billion litres.
“Queensland’s position from the outset has been to avoid unexpected consequences from high fuel prices, and how this can be calculated, collected and distributed has been facilitated following today’s meeting,” Mr Janetzki said in a statement. he said.
Western Australian Premier Roger Cook said state and territory leaders were united in their desire to deliver real relief from bowser.
“We know that the price of gasoline drives inflation due to rising transportation costs for nearly everything in our economy,” he said in a statement.
Prime Minister Anthony Albanese applauded the agreement in a speech at the National Press Club in Canberra.
“Give a round of applause to the states and territories,” he said.
“This will mean a total savings of 32 cents per liter.”
Mr Albanese and federal Chancellor of the Exchequer Jim Chalmers said in a statement that it was easier and quicker to implement the aid by further reducing fuel duty rather than replacing the GST itself.
But the decision to forgo $400 million in tax revenue will be a blow to state and territory budgets at a time when every jurisdiction except WA is struggling with huge deficits.
Research institute e61 has found that the idea that states will benefit from a GST windfall as a result of the conflict is likely an illusion.
“More money spent on fuel due to higher fuel prices likely means less money spent on other things,” e61 economists Josh Clyne and Lachlan Vass said.
The duo predicted that the windfall would disappear entirely given changes in consumer behavior.
