Released on the same day as Mr Costello's Budget was announced to the nation, the report called for an excise to be applied to all fuel products at different rates dependent upon their fuel content, the excise to be levied on petrol to come down by about 4 cents a litre as well as allowing business to claim fuel costs as an input tax credit.

To cover the cost of the excise cut and the new tax break for business, the report called on the Government to restore automatic indexation.

Despite the cost the revenue, the Government rejected Mr Trebeck's recommendations, saying they would have breached election promises. "We cut the tax take on petrol and I want to tell the Australia public we have no intention of reintroducing petrol excise," Prime Minister John Howard said.

The Howard Government abolished automatic indexation and cut excises prior to last year's election following backbench pressure to act on fuel tax after record bowser prices last year. The moves cost the Government some $4.6 billion in revenue over four years.

The oil industry and groups such as the Australian Automobile Association and the Australian Chamber of Commerce and Industry said the report warranted further considerations.

While the Government rejected the recommendations coming from the fuel tax inquiry, it did accept a report from the Australian Competition and Consumer Commission recommending against price regulations for petrol.

The ACCC report said price regulation to end the unpopular spikes in retail seen at public holidays and weekends could have negative effects on competition.