There’s a bit of a hullabaloo going on here in Australia at the moment about tax on petrol which is due to rise on November 10th. When that date arrives I will have lived here in Australia for seven years, barring for just four days.
In all that time, I’ve never heard any mention of tax increases on petrol here in Australia until now. Petrol prices do jump around in Australia on a daily basis, back in February 2009 during just one week, prices varied from between about $1.08 and $1.22…
Today petrol prices are quite significantly higher…
You would be forgiven for thinking that the rise has been steady over the last seven years, but just two months ago petrol was on offer for $1.29 per litre. So petrol here doesn’t just jump around on a daily basis, it’s weekly and monthly as well.
Brits: Punished at the pump
Okay, let’s have a quick look at how this tax on petrol thing works in the UK. Well, that’s what I would have liked to have done but as with anything to do with tax, it’s complicated. In the UK though, every year the Chancellor can raise or lower the tax on petrol however he sees fit.
So if he wants to put one penny per litre on, he can. If he wants to take a penny per litre off, he can do that as well. Going back a little in history, during the Thatcher government, the Conservatives introduced the Fuel Price ‘escalator’.
By the time the escalator was abolished in 1999, fuel tax had risen by just over 14p per litre. That didn’t stop the rises though and it went up by 2p a litre in the 2000 budget. It went up again in the 2007 budget by 2p per litre and again by the same amount in December 2008.
Then I would have to explain that the 2008 increase was to offset the reduction of VAT from 17.5 percent to 15 percent, although that didn’t matter too much because 1 January 2010 the VAT rate reverted back to 17.5 percent. So the 3p increase due the beginning of that year was reduced to 1p per litre although the rate went up by another 1p on 1 April of the same year.
Yes, April Fools’ Day.
Oh, it also went up a bit more in October of the same year and in January 2011 and, err, that’s the same year that VAT went up to 20 percent affecting petrol prices even further.
As I mentioned earlier though, the government could reduce tax as well is putting up, and that’s what they did in March 2011, reducing the rate by 1p per litre.
I told you it was complicated, and I got all this information from the quite comprehensive website on the subject called petrolprices.com and you can read the full story over there.
Needless to say, tax on petrol in the UK is very high and in March of this year The Telegraph printed an article with the headline British fuel tax highest in Europe.
Australians: Beaten up at the bowser
The browser, in case any of you didn’t know, is the Australian word for the petrol pump. Let’s see if we can have a quick look, well a quicker look than we have just had for the UK would be nice, to see how tax works on fuel here in Australia.
- In 1983, six monthly indexation, in line with CPI, was introduced.
- In 2001 under the Howard government the tax rate was cut by 1.5 cents per litre and indexation of petrol tax rates abolished.
- Since then, no tax increases.
- The current government’s proposed tax increases starting in November are set to increase the prices at the rate of half of one percent every six months over the next four years.
- I’m not quite sure what happens after those four years, but they say a week is a long time in politics, so not much point in thinking about that right now.
There you go, I think that’s it for Australia.
Not so complicated and certainly less taxing. In fact, according to a chart on the Australian Institute of Petroleum, Australia has the fourth lowest prices for petrol in all of the OECD countries, only Canada, Mexico and the United States have cheaper petrol…
Petrol Prices & Taxes in OECD Countries (June Quarter 2014)
They quoted their source for the information as Australian Petroleum Statistics, Bureau of Resource & Energy Economics; I couldn’t find it, but you can read more over at aip.com.au
I’ve said many times on this blog that people in Australia complain about pretty much the same things as those in the UK do. Australians aren’t happy about the traffic, taxes, drunkenness, violence on the streets, crime, but all these things have to be looked at in comparison, especially by those thinking of moving to this country.
Australians are going nuts here about this proposed tax increase that is no longer being proposed and no longer has to pass through Senate, but has instead been pushed through via some kind of sneaky backdoor method. This could backfire on the government yet; if they don’t get this deal ratified over the next 12 months they could well end up having to give all the money back to the fuel companies.
Meanwhile, back in the UK, tax on petrol goes up pretty much whenever the government feels like it. So here in Australia, are we really so badly off with this move? The government say they will spend every cent on building new roads; we certainly need some of those.
Maybe they could call one of those new roads the Senate Bypass, just for a laugh?
Like most people, I hate tax hikes, but you won’t find me whingeing about this one too much. I’ve lived in the UK.
For more information about petrol prices, see: