Australians are bracing for more pain at the fuel pump, with the federal government set to scrap its fuel excise discount this Sunday.

The government has confirmed the full fuel excise – a flat tax on petrol and diesel bought at the bowser – will kick in again at midnight on August 2.

In February, Australians were paying 52.6 cents of tax for every litre of fuel pumped. The 60% discount was introduced in April – as the US-Iran war flared up and effectively severed the flow of oil and gas through the Strait of Hormuz. It cut the fuel excise rate to 20.6c a litre.

However, the federal government has said this fuel relief measure was never meant to be permanent. That’s despite persistent cost-of-living pressures and the volatile conflict playing out in the Middle East.

So has the discount actually helped motorists? And once it ends, will fuel prices surge?

Remind me, what is the fuel excise?

The fuel excise is effectively a government tax on fuel and diesel sold at retail fuel outlets.

In Australia, we’ve had one form of the fuel excise in place since Federation in 1901. At the time, the federal government could only tax a handful of goods. Fuel was one of them, as the government could impose an import tax on fuel when it arrived on Australian shores.

Today, the fuel excise acts like any other tax: a source of government income that is used to pay for defence, health care........

© The Conversation