Federal budget delivers fuel excise cut for motorists at the bowser

Treasurer Josh Frydenberg made the petrol tax cut announcement as part of Tuesday night's budget, with the move expected to help ease cost-of-living pressures.

The 22 cent per litre saving comes into effect at midnight and is expected to be passed onto motorists in the next two weeks.

It's a temporary measure by the government with Mr Frydenberg stating the 22 cent excise relief would continue for the next six months.

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The excise was 44 cents per litre (cpl) with the 22 cent cut saving $11 per tank of fuel on a 50-litre vehicle.

South-west unleaded fuel prices rose above $2 per litre earlier this month and reached as high as 2.20c/pl in some areas.

On Tuesday Warrnambool prices were 1.99.9c/pl.

Noel McNeil from McNeil Bros BP welcomed the news and said it would be a relief for motorists and businesses.

"People have slowed down with buying because a tank of fuel, it's not hard to put $150 in a car and it can be a couple of hundred dollars to fill a four-wheel-drive," he said.

"The cost of freight and everything goes up as well. It doesn't matter what industry you're in, if fuel goes up, it affects almost everything."

Mr McNeil said he would pass all excise savings on to the customer but he wasn't sure how long it would take for the price cut to take effect.

It could mean clearing existing fuel and seeing what other outlets were doing.

"If you paid for it at the higher price it might take a day or two to get rid of the fuel that's there but if people go down you've got to match the price or go somewhere near it.," he said.

He said it would be a "big boost to the economy" if the price of fuel was brought under control.

"A family have got a certain amount of money to spend and if they're spending another 10 or 20 per cent on petrol, they've got to cut down somewhere else," he said.

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