The impact of the fuel tax cut is short-lived | western lawyer

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It wasn’t long before the benefit of a fuel tax cut was wiped out by persistently high oil prices and a weaker Australian dollar impacting imports. Motorists are already paying $2 a liter again despite the excise tax halving for six months as part of an $8.6 billion cost-of-living package in what turned out to be Josh Frydenberg’s last federal budget on March 29. AMP chief economist Shane Oliver says it shows how fuel tax cuts can be easily overwhelmed by fluctuations in the oil and gasoline market. “Now we have little to show; the ATO has lost the revenue it would have raised and it will be very difficult to raise it in September,” he said. As the count continues after Saturday’s federal election and Mr Frydenberg may lose his Victorian seat, the incoming Labor government says it has no plans to extend the tax cut beyond September. The Australian Institute of Petroleum will announce the weekly petrol price on Monday. Last week’s report found that the national average had risen to 185 cents per liter, the fourth consecutive weekly increase after falling to an average of 166.3 cents per liter in mid-April following the tax cut. Meanwhile, Reserve Bank of Australia assistant governor for financial markets Christopher Kent will address a KangaNews conference in Sydney on Monday. He will discuss the next phase of the central bank’s bond-buying program, which complemented the record low cash interest rates during the pandemic. In the minutes of the RBA’s board meeting in May — where it raised the cash interest rate from 0.1 percent to 0.35 percent — it said it had no intention of selling the bonds under the $350 program. billion that ended in February. Instead, the portfolio was supposed to mature in a predictable manner as the bonds matured. “While this contributes to the withdrawal of monetary stimulus, it would also recognize that spot interest rates remain the primary tool for achieving the desired monetary policy stance,” the minutes released last week said. Australian Associated Press

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