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Foundations for Massive Petrol Tax Increase Laid

Automobile Association
Road Transport Forum

Friday, 5 July 2002

Strategy Lays Foundations for Massive Petrol Tax Increase

A draft New Zealand Transport Strategy could raise petrol taxes by as much as $1 a litre if implemented a group of road user organisations warned today.

The group representing motorists, business people and transport operators called on the government to make the draft policy available to the public. At present it appears the intention is to slip a radical change in transport policy into place without public input, at a time when people's attention is focussed elsewhere.

The group said the draft New Zealand Transport Strategy is not a sector strategy at all but really a social agenda. It has no analysis and no practical plan for implementation which are the hallmarks of a genuine sector strategy. Indeed in many areas the document concedes more research is needed to justify its sweeping assertions.

A primary concern is that the document proposes imposing substantial additional costs on road users. Ministry of Transport studies released in 1996 calculated the cost of just some of the impacts raised in this document could be between $990 million and $3.1 billion per year. These impacts alone would translate to petrol tax increases of between 33 cents and $1 a litre – effectively doubling the cost of petrol.

The group comprising the Automobile Association and the Road Transport Forum warned that the draft strategy could have devastating economic consequences for the whole country. The group said it is especially disturbing that the draft strategy out to the year 2010 does not include economic efficiency as part of its vision. In addition the document contains no analysis to show its potential impact on economic growth and prosperity.

The group believes the deliberate intention of the draft strategy is to drive cars and trucks off the road by greatly increasing costs. This will hit lower income members of the community the hardest. Those who do not live in urban areas will get a double whammy. They will pay extra but will obtain no noticeable benefit.

All members of the group are firmly convinced that economic efficiency must be the overriding principle of any transport strategy if the government is serious about economic growth. For an economy based on exports an efficient transport sector is essential. If adopted in its present form this draft strategy would price many motorists off the road and have a suppressing effect on the entire economy which will hinder job creation, growth and export competitiveness.

For more information contact:

George Fairbairn, Director Public Affairs Automobile Association 0-4 470 9984
Tony Friedlander, CEO, Road Transport Forum 0-4 472 3877

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