Tim O'Brien | Jun 18, 2008

Gee, talk about ‘all shoulders to the wheel’. First it was the big announcement from the Rudd-bot about Fuelwatch which is predicted to, but may not actually, save us the grand total of… (wait for it… wait for it…) 1.5 cents a litre!

Whoa, tie me down: a whole 1.5 cents, I wonder what I’ll rush out and spend it on.

Then, not to be outdone, Dr Whatsisname comes back with a promise to slash (yes “slash” brothers and sisters) a full 5 cents off the petrol excise if the Liberals win Government. (Now let’s just play along for a bit and ignore the reality that the next election is three years away and my Aunt’s dead cat has more chance of winning than the riveting Dr Thingamyjig.)

But it’s a start; 5 cents is better than 1.5 cents, much better. (And you are aware, I presume, that you now pay 38 cents excise, plus GST on the total bill, for every litre you tip into your tank.)

kevin-rudd

So, to keep the banter on the front pages, the lad Rudd re-enters the field of battle and promises to “look” at dropping the GST on the excise part of the petrol.

Hmm, ok, better work that one out: excise is 38 cents, which is a tax, and GST, which is also a tax, is 10%, so… the GST tax on the excise tax comes to 3.8 cents. Which may, or may not, be dropped (got a feeling a focus group might be needed here).

Petrol heads rejoice!

But hang about, isn’t all this a bit like giving a bicycle to a fish? Good intentioned, great, simply great, but not really very useful.

You see, when I looked a few minutes ago, petrol was over $1.60 a litre. At that price, a typical sixty litre fill leaves enough change from one hundred bucks to buy three cupfuls of air and a watermelon pip.

Now I don’t want to seem ungrateful here, but someone really does need to point out that a saving of a whole 3.8 cents per litre isn’t going to bring people out into the streets doing cartwheels. It amounts to a total saving of $2.28 on a typical sixty litre fill.

Call me cynical, but I’m not sure that’s going to cut the mustard with those ‘working families’ we keep hearing about.

Now enter stage left the Taxation Institute of Australia (TIA). The TIA has called for the abolition of GST on petrol - outright. It says that Government is pocketing windfall GST increases every time there’s a price rise. “Every 1 cent increase in the bowser price means that working families will fork out an additional $17.3 million in taxes to State Governments (who get the benefits of GST collected).” The TIA reckons we already pay enough tax on fuel through the excise tax.

“If fuel prices reach $2.00 as forecast, this will mean an extra $865 million per year paid in GST for the benefit of States,” it said.

So, maybe the TIA has a point here: I mean, we’re already paying 38 cents a litre tax with the fuel excise, why do we then pay an additional tax in the form of GST?

To finish this little homily, here’s an interesting fact: Western Governments make more out of fuel through taxes and charges than the oil producing countries that pump it out of the ground.

Salutary eh?