Coalition proposes automatic fuel tax cuts during oil price spikes

The Australian Coalition has proposed a “Fuel Price Shield” to provide automatic relief to motorists when global oil prices spike. Under the plan, the fuel excise would be halved if the two-week average price of Brent crude rises above US$100 a barrel. The measure is intended to reduce pump prices by approximately 27 cents per litre, potentially saving drivers about $15 per tank.

To fund the estimated $950 million monthly cost, the Coalition suggests offsetting the expense by cutting tobacco excise by 80 per cent. Proponents argue the rule-based approach removes political discretion and provides certainty for retailers and regional drivers who rely heavily on vehicles.

Critics, including Treasurer Jim Chalmers and MP Allegra Spender, have dismissed the proposal as “uncapped and unfunded,” warning that broad excise cuts could exacerbate inflation. Spender suggested that support should instead be targeted toward the specific households and industries most affected by rising costs.