Government takes more from motorists' pockets as fuel excise rises again
31 July 2025
MELBOURNE – Australian motorists face another blow to their hip pocket when the Federal Government raises fuel excise in line with CPI on Monday 4 August 2025, marking the second increase this year in what has become a predictable six-monthly tax grab.
Currently set at 50.8 cents per litre, the new excise for petrol and diesel will rise to 51.6 cents per litre. Fuel retailers will be forced to pass on this additional cost to consumers.
The result will be higher prices at the fuel bowser, hitting families and businesses already struggling with cost-of-living pressures.
"This is an indiscriminate tax that disproportionately affects low-income earners and families who rely on their vehicles for work and essential travel," VACC CEO Peter Jones said.
What makes this particularly frustrating for motorists is that fuel excise is effectively a hidden tax. Unlike other government charges, the excise is built into the price displayed at the pump, meaning consumers are often unaware they're paying this substantial government levy on every litre purchased.
To add insult to injury, motorists then pay GST on top of the fuel excise – essentially paying tax on a tax.
"It's a clear double dip by the Federal Government. Motorists are being slugged with excise, then charged GST on that excise. It's no wonder Australia continues to have some of the highest fuel costs in the developed world," Jones added.
Many angry consumers question fuel retailers about ever-increasing fuel prices, but it's the major oil companies that set wholesale fuel prices, with the Federal Government then adding its substantial fuel excise (51.6 cents per litre) plus GST (10 per cent).
"Motorists deserve transparency about how their fuel is priced. They need to understand that fuel excise isn't a static tax – the government increases it every six months, and it's a significant component of what they pay at the pump."
The fuel excise remains a major revenue source for the Federal Government, generating billions annually from Australian motorists.
Adding to the complexity, the Federal Government's New Vehicle Efficiency Standard (NVES), which became mandatory in July 2025, is designed to accelerate electric vehicle uptake. As more Australians transition to EVs, fuel excise revenues will decline significantly, creating pressure on government to develop alternative funding mechanisms for road infrastructure. VACC advocates for a nationally consistent road user charging system to ensure fair contributions from all road users whilst avoiding a patchwork of state-based policies.
Media Contacts
Andrew Molloy
Manager Marketing, Media, Communications & Publications
P. 03 9829 1248 | M. 0457 188 375 | E. [email protected] | W. vacc.com.au
Karla Leach
Executive Manager, Marketing and Communications
P. 03 9829 1247 | M. 0429 334 832 | E. [email protected] | W. vacc.com.au
About VACC
Founded in 1918, the Victorian Automotive Chamber of Commerce (VACC) represents over 5,000 businesses in Victoria and Tasmania who employ more than 50,000 people. Member businesses range from new and used vehicle dealers, repairers, vehicle servicing, parts and component wholesale/retail and distribution and aftermarket manufacture, tyre dealers and automotive dismantlers and recyclers.
VACC develops the future workforce, employing 560 apprentices and trainees through its group apprenticeship scheme, and maintains memberships with the Motor Trades Association of Australia and Australian Chamber of Commerce and Industry. It contributes to the national policy debate through these leading industry associations.