Today newspapers revealed that not only are tax payers to be hit with a so-called “deficit levy” for those on higher incomes – a budget option that has raised the ire not only of the public but also of many backbenchers who fear an electoral backlash – but also that the government is seriously considering slugging motorists at the fuel pump with a lift in fuel excise in next week’s budget.
If true, the excise hike would be the first in more than a decade. Fuel excise has been locked at 38.1 per litre since 2001 when the Howard government froze the twice yearly price indexation after introducing GST on petrol.
The proposal would lift the excise by three cents a litre, allowing the government to potentially rake in an extra $1 billion annually.
With intense public sensitivity over petrol prices – it’s one of those common financial touchstones such as bread and milk that everyone experiences on a regular basis – no one in Government has dared touch it since. But now it seems that when Joe Hockey talked about everything being on the table in the coming budget he meant a change in fuel excise as one of the substantial “structural” changes he had in mind.
As such, it’s another revenue-raising proposal that may be seen by an already fearful public as a step too far. Opposition to the deficit levy is running high in the community, according to a number of opinion polls published this week. In fact, says reports, some within the Liberal Party are privately warning that such a move could even overshadow the reaction so far to the now almost certain deficit tax.
Many backbenchers are now also saying that the impost would break the government’s pre-election promise not to raise new taxes, though the treasurer has hit back at that idea saying the government went to the election with the declared intention of raising a levy on business to fund the controversial Paid Parental Leave Scheme (PPL).
“We went to the last election promising to introduce a levy for PPL so claims that we said we would never introduce new taxes are just wrong,” he is quoted as saying in The Australian Financial Review.
Related: Tony’s tax: a play on words
