Mike Stevens | May 13, 2010

THE FEDERAL Government is set to impose a 2.5 cent per litre excise on LPG from July next year, growing to 12.5 cents over the following five years.

While the Government has spent around $400 million in the past five years to subsidise the adoption of LPG fuel by nearly half a million motorists and fleets, the excise is expected to pull in $540 million over the next four years.

The Howard Government had announced plans for an LPG excise in 2004, but until recently, it was unclear if the incumbent Rudd Government would proceed.

No announcement has yet been made, but in speaking with Fairfax this week, LPG Australia CEO Michael Carmody said that he had found reference to the excise in the Budget Papers released earlier in the week.

'Why make a cleaner fuel more expensive when you just gave people incentives to convert their cars to use it, and when car companies have spent a lot to re-tool production lines to produce cars that run on it?'' Mr Carmody said.

A Federal Government spokesperson told Fairfax that the decision to implement the excise had not been announced because it had already been factored into the Budget's forward estimates by the previous government.

At a current average price of 62 cents per litre, LPG will still be considerably cheaper than unleaded petrol - less than half the price of ULP - when the excise is introduced, but without an announcement, motorists could be in for a surprise next year.

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