The Australian Customs and Border Protection Service have confirmed that the duty rates on aviation fuel and a number of alternative fuels have been increased in line with amendments to the Clean Energy Act 2011.
The Clean Energy (Customs Tariff Amendment) Act 2011 has amended the Customs Tariff Act 1995, and has resulted in the adjustment of duty rates for aviation fuel to reflect the carbon emission price of the fuel. This price has been set in accordance with the new Carbon Pricing Mechanism, which is designed to compensate for the negative impact that carbon emissions are having on the environment.
The result of the initiative is a significant increase in the duty per litre for both aviation gasoline ($0.03556/L to $0.08616/L) and aviation kerosene ($0.03556/L to $0.09536/L).
The new duty rates, which will be applied from 1 July, 2012, include the CASA levy used to help fund the Civilian Aviation Safety Authority.
From 1 July 2012, carbon emissions that are attributed to compressed natural gas (CNG) will also be taxed in line with the Carbon Pricing Mechanism, rather than by previous fuel tax arrangements.
And from 1 July, 2013, carbon emissions from both non-transport liquid petroleum gas and liquefied natural gas will also switch to the carbon tax pricing mechanism.
The new duty rates sees CNG for transport purposes increase from $0.0522/kg to $0.1045/kg, with the same adjustment made to duty on liquid natural gas (LNG). The increase in liquid petroleum gas (LPG) doubles from $0.025/L to $0.05/L.
Initially, the new taxation rates on alternative fuels will adhere to a Carbon Pricing Mechanism that is fixed-charge based. This pricing system will be retained for a period of 3 years, ending on June 30, 2015, when market developments will begin to have a direct influence over the charges to be paid.
However, the prices are due to increase steadily over that period. From 1 July, 2013, the prices will see CNG for transport purposes, and LNG both increase from $0.1045/kg to $0.1567/kg, while LPG will increase from $0.05/L to $0.075/L. In 2014, CNG and LNG will both increase to $0.209/kg, and LPG to $0.10/L.
Flexible charges will be introduced after the final fixed-charge adjustment on July 1, 2015. The final adjustment is expected to see CNG and LNG duty both increased to $0.2613/kg, and the duty on LPG to $0.125/L.
The Clean Energy Act 2011 has been described as the biggest change to Australia’s tax, environment and social policy settings for over a decade, affecting a total of 14 individual areas of legislation, from Excise Tariffs and Fuel Tax to Income Tax and Household Assistance entitlements.
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