What the fuel excise hike means

WHAT THE FUEL EXCISE CHANGE MEANS

Motorists will pay about 40 cents more for a 50-litre tank of fuel, rising to 44 cents from February 1 as fuel excise returns to twice-yearly indexation according to the rate of inflation.

The excise will rise with each successive indexation.

WHAT THE GOVERNMENT GETS

A large, guaranteed income at a time when other revenue streams are dwindling.

Treasury forecasts from Joe Hockey's first budget show a twice-yearly excise hike linked to inflation would raise an additional $2.2 billion over four years and $19 billion over the next decade.

The current rate stands at 38.143 cents per litre.

It's estimated the impost would now be 55 cents a litre if John Howard had not frozen indexation.

SO WHY DID CANBERRA EVER LET THIS ONE GO

Motorists started paying fuel excise soon after the advent of the internal combustion engine.

Paul Keating introduced twice yearly indexation of fuel excise in his first budget in 1983 to raise relatively painless and growing sums every time a motorist filled a petrol tank.

John Howard dumped it in 2001 as a sop to those concerned the new GST meant they were being taxed twice at the pump.

THE PROBLEM

The government proposed raising the excise in the 2013 budget, but it faced defeat in the Senate where it lacks a majority.

The Greens initially favoured the increase for public transport, but they now say it's a tax on families, as does Labor.

HOW TO GET AROUND THIS OPPOSITION?

The government is framing it as a tariff proposal which has to be validated by parliament within 12-months.

This will be tabled in the House of Representatives this week and take effect from November 10, allowing the tax office and Customs to start collecting the extra cash.

It is confident senators can be swayed.

AND IF NOT?

The government would have to repay the fuel companies, who would be obliged to repay consumers.