2 December 2004

“Roads Can Be Funded From The Government’s Surplus Without A Need For Increased Petrol Tax” Says Aa

The Automobile Association today called on the Government to provide its promised road funding for New Zealand’s regions by drawing on the large reserves accumulated in the Crown Account, rather than through an increase in petrol tax next year.

This statement was in response to the Customs and Excise (Motor Spirits) Amendment Bill, which is currently being considered by the Finance and Expenditure Select Committee.

The Bill gives effect to a 5 cents per litre increase in petrol tax to be paid at the pump from 1 April 2005 and also inflation indexes future contributions to land transport funding. The revenue raised by this increased taxation is to be used to fund further new road construction across New Zealand’s regions, including much need investment in Auckland, as part of the Government’s “Investing for Growth” Strategy announced in December 2003.

“With the pump price for petrol already very high, we are concerned about the inflation effect, and the economic and social impact that additional taxation would bring. The obvious solution to this issue is for the Government to draw on the substantial funds already accumulated in the Crown Account either in part or totally, to deliver the additional funding that has already been promised to New Zealand’s regions” AA Director of Public Affairs, George Fairbairn said today.

The Association noted that motorists currently pay taxes of 41.99 cents (GST exclusive) for each litre of petrol purchased, with only 17.5 cents of that revenue going directly into funding land transport activities. For some time 18.7 cents from each litre (or more than $600 million per year) has been accumulating in the Crown Account in addition to the GST revenue collected from all fuel sales.

“It would be fair and reasonable for the Government to deliver on its promise of additional funding to provide the safe roading network needed for a growing economy by using at least some if not all from existing funds, rather than seeking to tax road users more, when their fuel costs are already so high” Mr Fairbairn concluded.

ENDS