Budget 2014: Motorists to pay more with Coalition poised to reintroduce indexation of fuel excise

Updated

Millions of motorists will pay more for petrol as a result of next Tuesday's budget.

The ABC understands the Government is poised to change the indexation on the fuel excise.

Former Liberal prime minister John Howard abolished the indexation after introducing the Goods and Services Tax (GST) in 2001.

Motorists have since paid 38.1 cents per litre in fuel excise, even though the price of fuel has nearly doubled since then.

Deputy Liberal leader Julie Bishop told the ABC in April the Government had "no plans" to re-index the fuel excise, but the ABC now understands the budget will see the measure reintroduced.

It is not known how much the excise will increase, whether it will be permanent, or how much will be raised.

But it is understood the Government is convinced that freezing the excise in 2001 has contributed to the budget situation which it has repeatedly said it was overwhelmingly elected to repair.

Junior minister Jamie Briggs has warned voters "there'll be a range of things in the budget that people will find uncomfortable".

"There'll be a range of measures which will be difficult for us to sell politically of course," he told ABC News 24's Capital Hill program.

"There'll be a range of things ... that people won't particularly like, and we have no joy in doing much of what we have to do, but we have to do it."

The peak national motoring body, the Australian Automobile Association (AAA), has called on the Government to rule out an increase in fuel tax.

"Any increase in fuel excise in this budget would be unjustified. The Government must be honest with motorists and confirm that there will be no increase in fuel tax," AAA chief executive Andrew McKellar said.

"Any increase would break the Government's commitment to motorists, with no suggestion before the election that fuel tax would be increased," Mr McKellar said.

"Motorists already pay too much tax and are not getting fair value for money with only a fraction of fuel excise being returned to spending on transport infrastructure by the Federal Government."

Labor says Government should be lowering taxes

Labor is attacking the Government for breaking its promises.

Opposition Leader Bill Shorten says the Government should be lowering families' taxes.

"Are they hitting families or are they hurting families?" he said.

But Treasurer Joe Hockey is defending the Government's pre-election promises on taxes, following a backlash over its debt levy.

Mr Hockey says the Government never promised not to introduce new taxes, pointing to the 1.5 per cent tax increase on big business that is proposed to fund the paid parental leave (PPL) scheme.

The Government is staring down backbench dissent over the idea, saying raising income taxes for the rich is the only the way the wealthy can contribute to repaying the debt.

But Liberal MPs, including Queensland backbencher Teresa Gambaro, say it is a breach of the Coalition's promise not to introduce any new taxes.

Mr Hockey has told the Australian Financial Review the belief that the Coalition never promised new taxes is "wrong".

"We went to the last election promising to introduce a levy for PPL, so claims that we said we would never introduce new taxes are just wrong," he said.

"We actually went to the last election with a written policy saying we were introducing the 1.5 per cent levy for PPL."

Cabinet signed off on a debt levy yesterday, with Finance Minister Mathias Cormann pleading with his colleagues and voters to trust the Government.

Meanwhile, former treasurer Wayne Swan says he left the budget in "sound shape".

Mr Hockey says if left unchecked there will be $123 billion of deficits and $667 billion of debt, based on last year's mid-year economic fiscal outlook.

Topics: budget, tax, government-and-politics, federal-government, rural, agricultural-subsidies, oil-and-gas, mining-industry, australia

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