Calls for petrol tax to be cut

Photo: NZ Herald
Photo: NZ Herald
Record petrol prices are the latest headache for the Coalition Government, with increasing calls for taxes  - which currently make up about 43% of the cost of a litre of fuel - to be reined in.

About $1.07 is the Government take per litre from several taxes including GST, on a litre of fuel, which is retailing at  around $2.50 at present.

Estimates have households spending an extra $200 per year on fuel taxes, compared with a year ago.

A nationwide boycott has been called for later in the month, and petitions are under way calling for Government action.

Fuel closer to $3 per litre by the end of the year has been hinted by some analysts.

AA petrol watch spokesman Mark Stockdale said when contacted the Government could expect to hear " a lot more about motorists’ frustrations".

"Yes, there will be pressure on the Government ... after all about half the cost is taxes," he said.

Nationally, all motorists paid an extra 4c a litre in excise tax from a week ago, while Aucklanders have since July been paying an extra 11.5c per litre.

"New Zealanders started the year at $2.10, and I don’t think they would have thought they’d be paying $2.50 nine months later," Mr Stockdale said.

He said the 4c excise increase, including GST, "couldn’t have come at a worse time", and he noted two more excise rises were already in the pipeline.

He said the AA had been advocating for years for governments to cut GST, given it was a "tax on a tax", as it included the excise and ACC payments, the latter of which is also under consideration for a 2c hike next year.

"The Government could reduce the cost by 10c per litre overnight," he said of dropping the GST element.

He said speculation on near-$3 per litre by the end of the year was "alarming", but he did not entirely rule out an escalation of the country’s woes of the current "double whammy".

"[Oil] commodity prices are on the rise and the New Zealand dollar is falling," he said of the present two-year low, now touching US64c.

He said while either commodity prices or the exchange rate on their own had the capability to boost pump prices, the "signs weren’t good" for either at present.

"I hope those predictions don’t come to pass," he said.

While there was a global oil shortage at present, for geopolitical reasons, he said the world was not running out of oil.

Given the Government can not control commodity prices, nor intervene meaningfully in the free-market exchange rate, "its only option is cutting taxes", he said.

National leader Simon Bridges said while the average New Zealand household was now paying $200 extra a year, Auckland families were paying $324 extra.

"Every time a New Zealander puts $1 of petrol in their vehicle, 53c of that is going straight into the Government’s coffers.

"The Government’s share and the costs faced by Kiwis [are] only going to get worse as fuel prices climb," he said.

Since the election, he said petrol prices had increased by 42c a litre on average.

This month’s 4c excise hike is expected to net the Government about $123 million a year in extra revenue, plus GST on the fuel price increase, which amounted to $220 million a year at current prices, Mr Bridges said.

"This Government fails to understand that petrol is typically a fixed cost for families and businesses ... It is the cost of getting goods and services to your customers."

He said rather than imposing more taxes, the Government should cut its own spending, starting with finding a more cost-effective solution to the billions of dollars it wanted to spend on Auckland’s trams.

simon.hartley@odt.co.nz

- additional reporting NZME

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