The Queensland government is holding out against a further cut to excise rates that would save the nation’s motorists an extra 8¢ a litre on petrol and diesel as Treasurer Jim Chalmers demanded the states solve the impasse “ASAP”.
As the federal government introduces rules to protect small businesses from the fallout of high-priced fuel, the Crisafulli government is under pressure from the rest of the federation to agree to a plan that would almost immediately cut fuel prices.
The surge in petrol and diesel is delivering the states and territories a GST windfall estimated at $300 million a month. The 10 per cent tax is imposed on the retail price of liquid fuel, which has meant a big increase in GST collections since the war in Iran began.
At this week’s national cabinet meeting, premiers and chief ministers agreed to forgo the windfall. Prime Minister Anthony Albanese, who announced federal fuel excise would be cut for three months, said it was up to the states to come up with their own way to implement the idea.
Most states, bar Queensland and Victoria, immediately backed a further cut in excise equal to the extra GST collected since prices spiked. That would be between 7-8¢ a litre.
NSW Premier Chris Minns, whose state would receive an extra $110 million a month in GST if nothing is changed, said a cut in excise was the simplest way to help the community.
“Take it straight off petrol. We just thought that was the shortest distance between A and B. It’s a clear, unambiguous intervention that we can make the public understands it. It’s very easy to implement,” he said.
Victorian Premier Jacinta Allan, who had initially backed using the windfall to support her state’s farm sector and reduce the price of some food, on Wednesday confirmed she now supported a general cut in excise to motorists.
“We can hold both positions … we can support the reduction of the fuel costs at the pump through further using the GST process. And we can also look at new ways and measures of supporting rural and regional communities and the agricultural sector. And that’s absolutely Victoria’s position, and will continue to be the position going forward,” she said.
But Queensland Treasurer David Janetzki signalled his state supported targeted cost-of-living handouts rather than a cut in petrol excise.
“Queensland is firmly of the view that the states should forgo the uplift in GST from rising fuel prices,” he said.
“Within hours of making Monday’s announcement, the federal government abandoned the plan to use the GST to calculate, collect and distribute those funds, forcing states to offer up alternatives.
“We await further advice about the best way to ensure Queenslanders are delivered this cost-of-living relief.”
This masthead understands that a key problem with Queensland’s demand is that it would be unconstitutional. The Constitution bars the federal government from having different tax rates between the states and territories.
The Queensland proposal would lead to the situation of NSW motorists in border communities such as Tweed Heads having petrol and diesel 8¢ a litre cheaper than in neighbouring Coolangatta.
GST is imposed at different parts of the fuel production cycle, making its calculation and its impact on the final price difficult to ascertain. A flat cut to excise is considered much easier to implement.
Chalmers said the states had to sort out the situation, and do it quickly.
“They made a commitment to the people of Australia and they need to follow through on that commitment,” he said.
Asked when he wanted a resolution, Chalmers said “ASAP”.
He made the comments after announcing a string of measures aimed at helping small businesses through the fuel crisis.
They include the Tax Office providing temporary relief to firms unable to pay their tax bills because of fuel supply issues, such as “generous” payment plans or the remission of interest and penalties.
Compliance action and debt collection in certain industries, such as transport, will be limited.
The small business responsible lending obligation exemption, introduced during COVID to ensure small firms could get access to loans, will be extended for another decade.
Banks are also putting in place specialist teams to help small businesses, farmers and communities adversely affected by the current crisis.
Tax commissioner Rob Heferen said his agency would attempt to help those facing a financial crunch.
“The ATO can’t waive tax debts, but if you can’t pay in full at this time due to high fuel costs, it’s important to pay what you can and arrange a payment plan with us as early as possible,” he said.
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.
Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.
James Hall is the News Director at the Brisbane Times. He is the former Queensland correspondent at The Australian Financial Review and has reported for a range of mastheads across the country, specialising on political and finance reporting.Connect via X or email.
Daniella White is a state political reporter for The Age. Contact her at da.white@nine.com.auConnect via X or email.