“The current debate over (reducing) the GST component on fuel prices is not logical” Mr. Crosby said.

“Removing the GST component affects finances at the state level,” he said.

“But federal finances are those most capable of absorbing the reduction in revenue, so it makes sense to cut the excise, not the GST component, to bring immediate relief.

“The Federal Government does not need the revenue from fuel excise and its removal would be anti-inflationary.

"And businesses will not thank governments for further complicating GST calculations by removing it from the excise component.

Fuel excise was brought in originally to ensure that fuel was priced at a level which ensured that Australian motorists paid ‘world’ price and that proper conservation of the resource occurred.

The tax was also intended to encourage more efficient fuel use and support the development of viable alternatives.

“When the GST was introduced, excise was reduced, in part, to compensate for the new tax, and, in part, to replace the state fuel taxes,” he said.

Mr Crosby said various Governments have rationalised the tax mix in many ways over the years, including making road-users pay their way.

“The problem with this logic is the value of the excise has grown to some seven times the value of expenditure on our roads,” Mr Crosby said.

“A reduction, or even elimination of the excise can be justified on the grounds that the world market for fuels has passed any reasonable level that may have previously required some Government intervention to check demand or encourage alternatives.”