Dutton vows to halve fuel excise

Federal opposition leader Peter Dutton has promised to halve excise on fuel for 12 months if his party wins power at the election on May 3.

Outlined in the Liberal Party’s 2025-2026 Federal Budget revealed last week, the discount would see the current excise of 50.8 cents per litre – applied to all petrol (including ethanol blends) and diesel – halved to 25.4 cents.

Based on an average refill of 55 litres per week, the Coalition claims Australian motorists will save approximately $720 if the scheme comes into action.

A tax on petroleum-based fuels has been applied in Australia since 1901, undergoing a myriad of adjustments as fuel efficiency of vehicles and Australia’s own crude oil production evolved. As it stands today, approximately 77 per cent of fuel excise collected from motorists is reinvested into the road transport network.

While Mr Dutton’s election promise could provide short-term relief to Australian’s during a cost-of-living crisis, it has reignited wider debate about the effectiveness and relevance of a fuel excise in general.

A ‘road user charge’ – which would see drivers pay per kilometre driven – has been suggested to either replace or complement fuel excise in the future, especially with the emergence of electric vehicles, which are not subject to fuel excise.

“New technologies are being adopted and Australia’s fleet is changing, however our tax system is not,” said Craig Newland, director of policy and research at the Australian Automobile Association (AAA).

The AAA says changes to fuel excise must “form part of a broader reform package to improve the fairness and sustainability of our motoring tax system”.

The NRMA has also raised concerns about the proposed discount.

“The excise isn’t really meant to be a lever that can be pulled for cost-of-living relief, even though we hope that is what will happen if [this change is introduced],” said NRMA media manager, Peter Khoury.