14 December 2005

Government confirms 2006/07 ACC levies

ACC levies for 2006/07 represent good news for motorists, no change on average for employers, and some increases for self-employed and wage and salary earners, ACC Minister Ruth Dyson said today.

Ms Dyson said that the government had adopted the levy rates recommended by ACC following public consultation. The rates have also been reviewed by the Department of Labour.

- The average composite motor vehicle levy will decrease by 8.2 per cent from $206.93 to $190.00, through a decrease in the vehicle licence fee.
- The average composite employer levy will remain the same.
- The average composite self-employed levy will increase from $3.22 to $3.54 for every $100 of earnings.
- The earner (or non-work) levy will increase from $1.07 to $1.16 for every $100 of earnings.
- All levies exclude GST.
- The levies are average rates. Individual rates for industry groups may increase or decrease based on recent experience.
- The new levies take effect from 1 April 2006, with the exception of the motor vehicle account which takes effect from 1 July 2006.

Ruth Dyson said in general, levy increases reflected upward pressures from the rising cost of healthcare, particularly for long-term claimants.

“For self-employed, their injury costs are rising while, at the same time, their leviable income has been static. If you have a flat pool of earnings to meet rising injury costs, it’s inevitable that levy rates have to rise.”

Ms Dyson said the self-employed levy rate increase also included the cost of a legislative change that improved weekly compensation for newly self-employed people whose previous earnings from paid employment can now be taken into account. This added six cents to the average levy.

The new rates will be implemented through regulations to be promulgated early next year.

Attached is a table comparing the 2005/06 and 2006/07 ACC levy rates. A background paper with more details is available at www.acc.co.nz under ‘ media releases’.

Who pays Levy component Current
2005/06 average New
2006/07 average
Employers* Combined Levy (for every $100 of payroll) $1.21 $1.21
which consists of a:
Work levy $0.88 $0.86
Pre-1999 claims levy $0.33 $0.35
Self-employed people* Combined Levy (for every $100 of earnings) $3.22 $3.54
which consists of a:
Work levy $1.82 $2.03
Pre-1999 claims levy $0.33 $0.35
Non-work levy $1.07 $1.16
All earners – through Inland Revenue Non-work levy (for every $100 of earnings) $1.07 $1.16
Motorists Average motor vehicle levy (per motor vehicle): through annual vehicle licensing fee and levy on petrol $206.93
$190.00

* Note: These are average rates. Individual rates for industry groups may increase or decrease relative to the average rate movements based on recent experience.

The above rates are exclusive of GST and take effect from 1 April 2006, with the exception of the motor vehicle levies which take effect from 1 July 2006.

For petrol-powered vehicles, the motor vehicle levy decrease will be implemented by reducing the vehicle licence fee. There will also be a decrease in the vehicle licence fee levy for non-petrol-powered motor vehicles.

The petrol levy rate component of the motor vehicle levy will remain at 5.78 cents per litre of petrol.

ENDS

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