ACC proposes higher levies for motorists in New Zealand

The Accident Compensation Corporation (ACC) has proposed higher levies for motorists in New Zealand, which could see petrol prices increase by almost 2 cents a litre. 

The Government would have to agree on the ACC's proposed changes for the 2019-2021 levy. The proposal includes an increase of 1.9 cents per litre for petrol, which is part of an overall 12 percent increase in the average motor vehicle levy (including petrol and registration).

It comes as New Zealanders prepare for the petrol tax to increase by 3.5 cents per litre on Sunday. Prices have reached a new high of $2.40 per litre in some areas of New Zealand, according to PriceWatch, and many Kiwis are struggling to cope.  

"Have you seen the price of petrol in New Zealand?" one person commented on Twitter, followed by the hashtag #AndThatsWhyImBroke. 

ACC Board Chair Dame Paula Rebstock says the proposed levy increases would substitute the growing number of claims for injuries in New Zealand which have increased by 6.4 percent, with "more people than ever needing our support". 

Alongside increases to motor vehicle levies, the ACC has proposed decreasing the average levy for employers from $0.72 to $0.67 - a 6.9 percent decrease. But earners' levy on income would be increased 2.5 percent from $1.21 to $1.24. 

New Zealand has experienced a period of economic growth over the last few years, Dame Rebstock says, which has influenced people to expose themselves to "greater risk". This has resulted in increasing medical costs and "increases in weekly compensation claims."

Other factors that have influenced the proposal are "increased costs for care and support workers resulting from the pay equity settlement agree by Government," says Dame Rebstock, as well as the "introduction of free doctor visits for under-14s".

"In addition, the impact of lower interest rates on our investments, and higher inflation forecasts, will have a significant influence on future costs," she says. "These factors need to be reflected in the levy rates now to ensure that we can support our clients' needs."

Despite the cost pressures, Dame Rebstock said the ACC's investment in injury prevention and internal changes have had a "positive impact". She said the past two years have seen higher investment returns than forecast. 

"This is helping us to manage increasing costs, and, with the exception of the motor vehicle account which is slightly higher than anticipated, we have kept levies from increasing as much as we thought in 2016," she says. 

How you pay your vehicle levy

You pay the ACC's motor vehicle levy either at the petrol pump - which is currently 6 cents per litre - or as part of your vehicle licence registration fee. For non-petrol vehicles, such as diesel, levies are paid entirely through registration. 

Paying part of your motor vehicle levy at the petrol pump makes it "fairer for everyone on the road," says the ACC. The more you drive on New Zealand roads, it says, the "more at risk you are of an accident, and so the more you pay."

Even electric vehicles (EVs) still have to pay motor vehicle levies. EVs and plug-in hybrid electric vehicles run off an externally charged battery, and the ACC classifies them as petrol vehicles. 

The reason diesel-vehicle drivers aren't charged a levy at petrol pumps is because diesel powers more than just road vehicles, such as boats and farm vehicles, and therefore it "isn't appropriate for us to add a levy at the diesel pump," says the ACC. 

Instead, diesel vehicle drivers are charged the entire ACC levy when they pay for registration.