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  • Fuel excise tax gap

    The fuel excise tax gap is the difference between the estimated value of excise raised from specific fuel products according to the law and the value actually raised for a financial year.

    Excise duty is a tax on fuel products produced or manufactured in Australia. These consist predominantly of petrol and diesel. Entities that manufacture or store excisable goods must hold an appropriate excise licence. They must pay excise duty on goods delivered into the domestic market.

    Imported fuel products are subject to customs duty at a rate equivalent to excise duty. This ensures they are treated consistently with goods manufactured in Australia. These imported goods are called excise equivalent goods (EEGs).

    For this estimate, fuel excise gap or fuel excise duty includes excise and customs duties.

    Fuel excise duty is a significant source of revenue with a relatively low cost of collection. Consumption is considered to be relatively inelastic.

    The fuel industry is highly regulated with a small number of large clients responsible for the majority of collections. The industry is generally viewed as compliant with the infrastructure requirements for handling fuel. This makes tax evasion on a large scale difficult. The mostly harmonised rates of duty also limit the opportunity for fuel substitution.

    Risk management activities are focused on early identification of compliance issues. We apply an appropriate tailored response depending on the degree of non-compliance and level of risk.

    This estimate covers the excise gap related to petrol, diesel, biodiesel, fuel ethanol and associated blends only.

    Estimate of the tax gap

    The updated gap is estimated to be $239 million in 2017–18 or 1.3% of total theoretical tax. Over the period from 2012–13 to 2017–18, the estimated net fuel excise tax gap ranges from 1.0% to 2.5%.

    Overall we see that the individual petrol and diesel gaps can often move in opposing directions. This has a smoothing effect on the estimated combined fuel excise gap. The diesel excise gap appears to be more volatile over time than the petrol excise gap. The changes in the gap appear to be reflective of underlying data variation and imperfections in the survey data used to derive the theoretical tax liability. Any compliance adjustments are small and do not drive the volatility.

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      Last modified: 17 Oct 2019QC 57193