Near $1 billion fuel excise hike for aviation under carbon tax plan

Aviation fuel excise is increasing under the carbon tax.

The excise on aviation fuel for domestic use – both jet A-1/avtur and avgas – will increase under the federal government’s long awaited carbon tax plan, announced by Prime Minister Julia Gillard in Canberra today, with the increases set to cost the industry $930 million over four years.

According to the government’s new www.cleanenergyfuture.gov.au website which explains the carbon tax policy, “domestic aviation fuel excise will be increased by an amount equivalent to the carbon price on an annual basis over the fixed price period to provide an effective carbon price for aviation.”

That will see the excise on avtur increase by 6.604 cents a litre to 10.16 cents per litre in 2014-15, while the excise on avgas will rise by 5.588 cents per litre to 9.144 cents per litre in 2014-15. The current excise on aviation fuel is 3.556 cents per litre.

Once the carbon tax regime switches over to an emissions trading scheme, planned for July 1 2015, the aviation fuel excise will then increase on a six monthly basis “based on the average carbon price over the previous six months.”

International aviation fuel use is not subject to the fuel excise, and is exempt from the scheme.