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The government is going to get a lot more money from taxes on petrol, beer, and spirits as automatic indexation to keep pace with inflation kicks into effect this week.

On Monday the twice-yearly increase to the fuel and alcohol excise took effect, which raises the price of each in line with the Consumer Price Index, regardless of which party holds government.

The tax on petrol rises from 48.8c per litre to 49.6c per litre before GST is applied, meaning drivers filling up the country’s most common small car, the Toyota Corolla, will be paying $25 on fuel excise tax alone. 

Those wanting to shake off their budget blues with a drink aren’t faring any better with the alcohol excise hike pushing up the price of a pint of beer by 90c, again before any GST is applied, according to the Brewer’s Association of Australia.

Australia is the third highest taxed country in the world for alcohol, behind Norway and Finland, with the cost of beer made up of about 42 per cent taxes.

The tax on a $50 carton of beer is about $20 while the tax on a 700ml bottle of gin retailing for $70 is about $30.

The Albanese government will rake in billions in tax from the petrol and alcohol excise which have both increased from this week, raising the price for households

The Albanese government will rake in billions in tax from the petrol and alcohol excise which have both increased from this week, raising the price for households

Australians pay $20 in tax alone on a  $50 case of beer or $30 on a 700ml bottle of $70 rum

Australians pay $20 in tax alone on a  $50 case of beer or $30 on a 700ml bottle of $70 rum

In 2021-22 the government received about $2.6billion in excise and customs duty on beer, while the windfall from harder liquor was double that at about $5billion.

Petrol dwarfs both of these, according to the 2021-22 Federal Budget, with the fuel excise responsible for 3.2 per cent of total government revenue at $18.2billion.

Most of that money is supposed to go towards road infrastructure projects, as much as 91 per cent, but only 68 per cent was used for that purpose in the 2021-22 budget. 

Electric car owners and wine drinkers will escape the tax hike because cars that run without petrol, such as a Tesla, do not attract the fuel excise tax and wine is exempt because it is taxed on its wholesale value rather than its alcohol content.

The Australian Automobile Association in a submission to the 2024-25 Budget process said the fuel excise is expected to raise $3billion more than last financial year despite more electric vehicles on the roads.

‘While the proportion of people paying fuel excise is falling, their collective tax bill is increasing,’ the AAA said.

‘In general, people with lower incomes and regional Australians will be paying more than those on higher incomes and in capital cities.’

The AAA noted registration data showed EV ownership is concentrated in CBD and inner-suburban areas.

Brisbane city has the highest number of EVs in the country, followed by the ACT and Gold Coast.

In NSW, the Sydney CBD, Northern Beaches and Ku-ring-gai council areas were where people owned electric cars the most.

Petrol prices at the pump will also increase from this week with Aussies paying $25 in fuel excise tax alone when they fill up a small car with a 50litre tank

Petrol prices at the pump will also increase from this week with Aussies paying $25 in fuel excise tax alone when they fill up a small car with a 50litre tank

Finance Minister Katy Gallagher last Thursday defended the price hike as a regular occurrence.

‘In relation to the indexation arrangements that are around alcohol, this is something that happens,’ she said.

‘This happens … as normal kind of course of business for governments of both persuasions, these are the tax arrangements that remain in place.’

However, Ms Gallagher did not rule out altering excise rates to battle the current cost of living crunch.

‘We look at these matters every budget, we look at what’s possible, what’s affordable,’ she said.

But Independent MP for Fowler in Western Sydney, Dai Le, called on the government to freeze the excise on petrol

‘With the cost of living, the people of Fowler are doing it tough… They’re under stress, and they’re paying more for everything,’ Ms Le said.

The fuel excise was temporarily halved for six months by the Morrison government in 2022 to ease pressure on wallets at the petrol pump but Treasurer Jim Chalmers has made no indication Labor is considering a similar step. 

‘I listen respectfully to suggestions made to us by crossbench colleagues and industry groups but my job is to make the budget add up at the same time as we roll out billions of dollars in cost of living relief in other ways,’ he said.

‘This includes electricity bill relief, cheaper childcare and medicines, rent assistance and bigger tax cuts for more people in Fowler and right around Australia.’

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This post first appeared on Daily mail

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