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Report Highlights Petrol Tax Folly

Report Highlights Petrol Tax Folly

A massive funding shortfall for roading is another reason why the government should stop diverting half of all petrol tax to the consolidated fund, said Hugh Ritchie, national board member of Federated Farmers of New Zealand.

Mr Ritchie comments follow a Land Transport New Zealand report which disclosed a $685 million shortfall for roads over the next 10 years.

“The answer is simple. The government should reduce the amount of fuel excise it diverts into the consolidated fund,” Mr Richie said.

Currently about $600 million of fuel excise paid by motorists each year is siphoned into government coffers and used for other purposes.

“If the government reduced the amount of money diverted then much needed road projects could go ahead.

“In the longer term we need to find a sustainable alternative to petrol tax. But if we want better roads then the obvious and immediate answer to the funding shortfall is to reduce the amount of petrol tax diverted to the consolidated fund and ensure that road users’ funds are spent on roads.

“Another advantage of all the $1.2 billion in petrol taxes actually being spent on roads is that the heavy financial burden on councils paying for roads would be eliminated.

“Councils pay for roading through rates levied on property values, meaning farmers pay a disproportionate share of the costs of roading. These anachronistic ways of funding roads are long overdue for an overhaul,” Mr Richie said.

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