Coalition Proposes Fuel Price Shield Funded by Tobacco Cuts

The federal Coalition has proposed a new policy called the Fuel Price Shield designed to automatically halve the fuel excise tax on petrol and diesel if the price of Brent crude averages more than US$100 a barrel over a two-week period. The Liberal and Nationals parties estimate this measure would reduce fuel prices by approximately 27 cents per litre, saving a typical motorist about $15 per tank and temporarily reducing the heavy vehicle road user charge to zero.

To fund the initiative, the Coalition plans to use $8 billion in revenue generated from a separate proposal to cut the tobacco excise by 80%. The Coalition argues that lowering the cost of legal cigarettes will encourage smokers to move away from the illegal tobacco market. The Parliamentary Budget Office estimates this shift would raise $8 billion over four years.