Fossil fuel taxes

10 January 2012

PDF version [441 KB]

Richard Webb
Economics Section



Fossil fuel taxes
Data sources and limitations
Estimated taxes on fossil fuels 2009–10


There are various estimates of the value of government subsidies to fossil fuels in Australia. These estimates range from around $8 billion to $12 billion annually.[1] Fossil fuels are also taxed. This paper identifies the fuels that are taxed, the forms that the taxes take and, where possible, quantifies the amounts collected.  

Fossil fuel taxes

The Australian Government taxes a variety of fossil fuels. They include crude oil and condensate, natural gas, liquefied petroleum gas, ethane, compressed natural gas, and ‘refined’ petroleum products such as petrol and diesel.

Taxes that the Australian Government imposes can be classified as income (direct) or indirect. Direct taxes take the forms of excise duties, customs duties, and the goods and services tax (GST). Excise duties apply to petrol, diesel, ‘other’ fuel products (such as aviation fuels), and crude oil and condensate. Credits for excise paid are available to some users of fossil fuels—notably the mining, agriculture and transport sectors—under the Fuel Tax Credits Scheme.[2] Customs duty applies to imports of ‘excise-like’ fuels, for example, petrol and diesel. The GST applies to households’ consumption of energy—such as electricity and natural gas—and other goods and services that embody fossil fuels in their prices. 

The Australian Government also imposes a number of ‘indirect’ taxes on the profits of fossil fuel producers such as coal and petroleum extraction companies. The Petroleum Resource Rent Tax (PRRT) applies to profits from the recovery of some offshore petroleum production. Company tax applies to the profits of companies including those engaged in fossil fuel extraction and processing. 

Data sources and limitations

Data is available for the amounts raised by the PRRT and the excise duties. However, data is not available for customs duty revenue raised from the importation of fossil fuels, and for the GST collected on households’ use of fuel and power. The GST figures in the table below are therefore estimates. Data for financial year 2009–10 were chosen because of gaps in the data for subsequent years.

Estimated taxes on fossil fuels 2009–10

The following table contains estimates of some taxes on fossil fuels in 2009–10.

Table: Fossil fuel taxation revenue 2009–10 ($ millions)



Income taxation

Petroleum resource rent tax


Indirect taxation

Excise duties:





   Other fuel products


   Crude oil and condensate


Subtotal excises

15 766

   Less: fuel tax credits 


Subtotal net excise

10 822

GST (estimated):







Subtotal GST (a)



15 499

(a) No estimates have been made for GST on diesel sales due to lack of data.


Department of Finance and Administration, Consolidated financial statements for the year ended 30 June 2010, Commonwealth of Australia, Canberra, 2010, p. 79, viewed 19 December 2011,

Australian Taxation Office (ATO), taxation statistics 2008–09: fuel schemes, ATO website, viewed 19 December 2011, GST estimates: Statistics Section, Parliamentary library


Revenue from Australian Government taxes on fossil fuels exceeds the value of subsidies. The table shows that revenue from taxes on fossil fuels in 2009-10 was at least $ 15.5 billion. Assuming that the Australian Conservation Foundation’s (ACF) figure of $12 billion for subsidies is correct, the table shows tax revenue as exceeding subsidies by about $ 3.5 billion.

However, the table does not include revenue—such as company tax paid by coal and petroleum producers and processors—and therefore underestimates revenue. Consequently, taxation revenue exceeds the value of subsidies by more than $3.5 billion.

[1].       Greenpeace Australia Pacific (Greenpeace), ‘Greenpeace tax reform priorities: Commonwealth tax summit, October 2011’, Greenpeace website, viewed 19 December 2011, See also Australian Conservation Foundation (ACF), ‘Australia spends $11 billion more encouraging pollution than cleaning it up’, ACF website, viewed 8 December 2012,

[2].       For a description of this scheme, see Australian Taxation Office (ATO), ‘Fuel schemes essentials’, ATO website, viewed 19 December 2011,

For copyright reasons some linked items are only available to members of Parliament.

© Commonwealth of Australia

Creative commons logo

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to

This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.

Feedback is welcome and may be provided to: Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.