28 June 2005
PR 099/05

Another Tax Increase For Motorists

Farmers and other road users are facing another tax hike on fuel – the fifth announced this year.

On July 1 the ACC levy on petrol rises by just under one cent per litre.

It comes on top of the five cents a litre increase that took effect at the end of March and three future tax increases in the pipeline:

- A carbon tax, which will increase petrol and diesel prices by up to 4.6 cents a litre from 2007;

- A higher petroleum fuels monitoring levy, which will increase petrol and diesel prices by one cent a litre; and

- An annual inflation adjustment to petrol excise tax dedicated to roads, to start in April next year.

"The ACC increase will take the total tax on petrol to 53.6 cents a litre. On the same day, the registration cost for diesel powered cars will increase by about $9 to around $223 a year," said Charlie Pedersen, Vice President of Federated Farmers of New Zealand.

"Although ACC has sought to justify its levy increase on the basis of covering increased costs from motor vehicle accidents, it and other tax increases are nevertheless more government-imposed costs that will be passed onto the consumer. Higher petrol prices mean increased downstream prices for goods and services.

"The increases are another drag on the international competitiveness of agriculture and first-stage processing.

"Federated Farmers welcomes increased funding for roading and the government’s recent announcement to spend an unexpected $500 million company tax windfall on roads. But motorists remain cynical about a government policy that siphons off 18 cents a litre of petrol taxes for the consolidated fund.

"That equates to $600 million a year sucked in to the consolidated fund for spending on non-roading purposes.

“High and growing taxes discourage innovation, productivity, saving and investment – all things the government says it wants more of. It’s time for some fresh thinking on tax,” said Mr Pedersen.

ENDS

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