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Source: GAC

A change to the fuel excise in Australia will come into effect from 1 August, as a result of the Federal Government's latest Budget which was handed down on 13 May.

Indexation against the CPI (Consumer Price Index) for the fuel excise will be reintroduced. This applies to all fuels and will have an impact on the shipping industry when a Australian coastal voyage is undertaken.

Fuel excise was linked to CPI up until 2000 when it was frozen at the current rate of $0.38143 per litre.

Bunker Excise

Currently when a coastal voyage is undertaken duty is payable on bunkers consumed at a rate of $0.38143 per litre. This rate will increase twice yearly inline with CPI from 1 August 2014. The last published (March 2014) CPI figures are 2.9% over the previous 12 months.

Fuel Tax Credits

Under the Fuel Tax Credit Scheme duty paid on bunkers is able to be reclaimed at a rate of, currently $0.31622 per litre, however this will decrease to $0.31285 from July 1, 2014 (this decrease was already known as part of the carbon tax legislation and is not as a result of the latest budget). At this point in time there is no mention as a result of the latest budget of any changes to the Fuel Tax Credit Scheme.

On this basis, the net effect is that from August 1 where bunker excise is payable as the result of a coastal voyage it will be levied at a rate higher than the current $0.38143 per litre and the available reclaim will remain unchanged (allowing for the expected reduction on 1 July), effectively operators paying bunker excise will be reclaiming less and therefore paying more.