Media statement
For immediate release
Monday, 4 October 2004

Oil price increases could knock economy

United Future finance spokesperson Gordon Copeland today called on the government to cut taxes to alleviate the impact of recent oil price increases on New Zealand’s booming economy.

“The $US50 per barrel crude price has been breached for the first time. The immediate flow-on effects are clear. They include not only a significant price increase in petrol and diesel at the pumps but also a windfall GST gain for the government’s coffers.

“This not only hits the consumer hard in the pocket but feeds through into the cost of living index and hence inflation. This in turn will put pressure on the Reserve Bank for further interest rate increases.

“In combination, it will dampen consumer spending and company profitability, and therefore poses a significant risk to the buoyancy of our economy.

“It’s like applying the hand brake.

“Government needs to assess the effects quickly, including the possible return of the GST windfall by way of tax reductions,” said Mr Copeland.

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