What is the Fuel Excise? How Australian Petrol is Taxed

Every time you fill up, a big chunk of what you're paying goes straight to the government. Here's exactly how Australian fuel is taxed, what the rates are, and what it means for the price you see at the pump.

The two taxes on every litre

Every litre of petrol and diesel sold in Australia carries two taxes:

Fuel excise — a flat cents-per-litre tax, currently 52.6 cents per litre (as of February 2026, indexed twice yearly)
GST (10%) — charged on the entire price, including the excise

Yes, you read that right: you pay GST on top of the excise. It's a tax on a tax.

How much of the pump price is tax?

Let's break down a typical litre of unleaded at, say, 180c/L:

Component	Amount	% of pump price
Product cost (Singapore benchmark + shipping)	~68c	~38%
Fuel excise	~53c	~29%
Retailer margin	~12c	~7%
GST (10% of total)	~16c	~9%
Wholesale/distribution	~31c	~17%
Total	~180c	100%

Roughly 38% of the pump price is tax (excise + GST). On a 50-litre fill at $1.80/L, that's about $35 in tax.

The exact proportions shift as the base product cost rises or falls — when petrol is cheap, the tax share is higher (since excise is a flat amount, not a percentage). When petrol is expensive, the tax share drops proportionally.

How fuel excise works

The fuel excise is set by the Australian Government and collected from fuel wholesalers (not directly from you at the pump, though it's passed through in the price).

Key facts about the excise:

It's a flat rate per litre, not a percentage. Currently 52.6c/L for petrol and diesel.
It's indexed to CPI twice a year — in February and August. This means it goes up automatically with inflation, without needing new legislation.
It applies equally to petrol and diesel — there's no diesel discount in Australia (unlike some countries).
LPG has a much lower excise rate — about 14c/L, roughly a quarter of the petrol rate.

The 2022 excise cut (and its end)

During the cost-of-living crunch in 2022, the federal government temporarily halved the fuel excise for six months (late March to September 2022). This knocked about 22c/L off pump prices overnight. When the cut ended, prices jumped back up by roughly the same amount.

This was a one-off measure and is not expected to be repeated, though it gets raised in political debate whenever prices spike.

GST on fuel

The 10% GST applies to the full retail price of fuel — including the excise. This means:

On a litre at 180c, the GST component is about 16.4c
About 4.8c of that GST is effectively "tax on the excise tax"

Businesses registered for GST can claim back the GST on fuel (and the excise for heavy vehicles via the Fuel Tax Credit scheme), but regular motorists cannot.

Why does Australia tax fuel so heavily?

Fuel excise revenue goes into general government revenue (consolidated revenue). It's not ringfenced for roads, despite being commonly described as a "road tax." The government collects roughly $16 billion per year from fuel excise.

The rationale is a mix of:

Revenue raising — it's a reliable, hard-to-avoid tax
Discouraging consumption — higher prices theoretically reduce driving and emissions
Paying for externalities — road damage, pollution, and health costs from vehicle use

Whether the current rate is fair is a political question. What's clear is that it's a significant fixed cost baked into every litre you buy.

What you can control

You can't change the excise rate, but you can control how much total tax you pay by buying fewer litres at a lower price:

Compare prices — a 15c/L saving on a 50L fill saves $7.50, tax and all
Use loyalty discounts — that 4c/L Everyday Rewards or Flybuys discount comes straight off the pump price
Drive efficiently — fuel-saving habits mean fewer litres burned, which means less excise paid

Every cent you save on the base price also saves you 0.1c in GST. It adds up.

Find the cheapest fuel in your area on BowserBuddy →