Federal Government Ends Fuel Cuts on 1 July — Road User Charges
The Federal Government is on track to end temporary fuel excise and heavy vehicle road user charges reductions from 1 July, ending a three-month cut that lowered petrol and diesel import tax to 26.3 cents a litre. James Ward reported the change as budget documents also point to work on a separate road user charge for motorists, including electric vehicle owners.
1 July fuel cuts
Since 1 April, the fuel excise charged to importers on every litre of petrol and diesel on arrival into Australia has been halved from 52.6 cents to 26.3 cents. Over the same period, the 32.4c/L heavy vehicle road user charge for buses and trucks has dropped to zero.
The three-month fuel excise cut is estimated to cost $2.9 billion in forgone tax revenue. Budget documents show a $3.8 billion shortfall in fuel excise and heavy vehicle road user charge revenue for the financial year ending 30 June 2026, with a further $350 million gap in 2026-27.
Budget documents and revenue
Fuel excise revenue is reported at $22.78 billion for 2025-26 and forecast to rise 24 per cent in 2026-27, to $28.26 billion. Two-thirds of that revenue comes from diesel, 26 per cent comes from petrol and 6 per cent comes from other fuel products.
The excise accounts for only about 4 per cent of all federal tax revenue, but the budget figures show how quickly temporary cuts change the revenue base. The move back to the earlier rates also restores the charge on buses and trucks that had been lifted to zero since 1 April.
Road User Charges plan
The government is continuing to work with states and territories on a road user charge for electric vehicles. Budget reports say: "Consistent with the recommendation of the Economic Reform Roundtable, the Government is continuing to work with states and territories on the development of a road user charge for electric vehicles to ensure fair and sustainable funding for road investment and maintenance".
Hybrid and electric cars accounted for 46 per cent of all new cars delivered last month, adding pressure to the existing fuel excise base as more drivers buy vehicles that use less petrol or none at all. Victoria introduced a road-user charge for electric and plug-in hybrid cars that the High Court threw out in 2023.
High Court ruling
The High Court ruled in 2023 that only the Federal Government has the power to implement such a tax, leaving the federal level as the place where any nationwide road user charge would have to be set. The government also reiterated its commitment to a $1.1 billion investment into the development of low-carbon liquid fuels in Australia, mainly for aviation and agriculture.
For motorists and freight operators, the immediate change is clear: the temporary discount ends on 1 July, and the broader reform effort now sits with the federal government and the states as they work through how road use will be charged in future.
