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  • Measuring the gap

    Estimating the fuel excise tax gap requires first estimating the total theoretical excise liability. This involves calculating the volume of fuel sales subject to excise during the year and applying an estimated average excise rate to those sales.

    We then compare the theoretical liability to the actual revenue reported and adjust for ATO compliance results to derive the gap. We estimate the combined petrol fuels and combined diesel fuels gaps separately, and then combine them to form the overall fuel excise gap. The combined petrol fuels include unblended and blended petrol, and denatured ethanol. The combined diesel fuels include unblended and blended diesel, and biodiesel.

    We use a top-down approach to estimate the fuel excise gap. We use data from Australian Petroleum Statistics (APS) published by the Department of the Environment and Energy and ATO data.

    Our gap estimates have been updated and marginally differ from the estimates published in 2015-16. This is primarily due to changes in the underlying datasets.

    There is a high concentration of participants in the fuel production and importing industry. This means that a small number of clients account for the majority of excise and duty collections. Monitoring strategies identify large-scale non-compliance, which helps to keep the gap small.

    Changes in policy (such as the reintroduction of excise on ethanol and biodiesel) are unlikely to significantly affect revenue or the gap. And there are no known administrative or policy challenges that will affect the gap in a material way.

    The reliability of the estimate is assessed as medium.

      Last modified: 10 Jan 2020QC 61079