Tax on alternative fuels

In the 2010-11 Budget, the Australian Government announced it would phase in increased taxes for alternative fuels from 1 July 2011. Alternative fuels, such as ethanol, biodiesel, LNG and CNG, would still be taxed at a lower rate than petrol and diesel due to their environmental benefits.

The discussion paper released by the Government claims the net fuel tax rates for LPG and LNG would increase from zero to 2.5 cents per litre in July 2011 and then increase each year until they reached 12.5 cents per litre in July 2015, because of the fuels’ lower energy content.

The discussion paper is after views on how the increased tax rates could be phased in; the point of collection of the fuel tax; and the appropriate temperature, pressure and measurement standards for taxing gaseous fuels. Submissions on the discussion paper close on 12 November 2010.

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