Economists say increasing petrol taxes would be a good idea as long as the poor and small businesses are compensated.
John Howard's 2001 decision to freeze fuel excise indexation was ''short-sighted'', and revenues would have been $2.4 billion a year in the past decade if petrol had been indexed to inflation, they said.
''You can't forever have a shrinking tax base,'' Chris Richardson, of Deloitte Access Economics, said.
Bank of America Merrill Lynch chief economist Saul Eslake said if the government did re-introduce the indexation of the excise on petroleum products, it would be ''sensible, reversing one of the sillier tax decisions of the past 20 years''.
The government would be able to make significant savings despite farmers and miners getting rebates for fuel spending.
''For each cent the current rate (38.1¢) goes up, you get back $375 million, of which you get to keep about $250 million because you have to give some back to business,'' Mr Eslake said.
A recent Grattan Institute report on balancing budgets said if the fuel excise had been indexed in line with inflation over the past decade, revenue would have been about $2.4 billion a year.
Another analysis has put the saving as high as $6 billion a year, but assumes motorists will not cut back on petrol usage if prices rise.
Grattan Institute chief executive John Daley said a higher tax on fuel would have a disproportionate impact on low-income households.
''If [the government] is looking at increasing petrol taxes like this, [it] has to correspondingly increase welfare payments to poorer households.''
In a recent speech, Treasury secretary Martin Parkinson suggested more money could be raised from indirect taxes such as the goods and services tax, and fuel excise.
But some argue that the budget deficit has been caused by excess spending, and tax increases such as the mooted deficit levy on higher earners and a fuel tax increase are not the best way to fix it.
AMP chief economist Shane Oliver said while he would prefer no tax increases on budget day, indexation should be restored, even it if meant short-term political backlash from motorists who would have to pay higher prices for fuel.
But he said the proposed deficit levy and rise in petrol taxes are ''piecemeal and not dealing with the fundamental budget problem'' caused by over-spending.
The national leader of indirect tax at Tony Windle, Grant Thornton, said existing concessions would need to rise to compensate businesses - particularly in sectors such as agriculture - which are facing increased costs.
Craig Whatman, partner at Pitcher Partners, said businesses affected by an increase in the fuel excise would pass it on directly to the consumer.
''This type of tax hike will have a wide-ranging effect across any industry that uses fuel as part of its business, including transport, logistics and mining,'' he said.
Institute of Public Accountants senior tax adviser Tony Greco was against an increase, saying it was a ''short-term measure to address long-term structural problems''.
''Any increase will feed directly into inflation as fuel is a significant component of individuals' and small business budgets,'' he said.
Tax Institute senior tax counsel Robert Jeremenko said the fuel tax should be indexed to the rate of inflation, as recommended by the Henry tax review.
Alcohol and tobacco excises have been indexed over the years, but fuel had received ''special treatment'', he said.