Fuel tax increase to hit motorists at the pump

Fuel tax increase to hit motorists at the pump
Photo credit: Newshub

The first legislation passed after the Wellbeing Budget was to increase the petrol excise tax by 3.5 cents per litre - an addition to the increase in 2018.

The Bill passed under urgency a law implementing the fuel excise tax increase which will kick-off on July 1, on the same day road-user charges bump up.

National's Transport spokesperson Paul Goldsmith said it was "pretty ironic" that the first piece of legislation passed following the Wellbeing Budget was "an increase on the taxes of hard-working New Zealanders".

"This Government gives with one hand a little bit of extra on school fees and that's swamped by the significant increase that all those families will be paying in their fuel taxes."

He was referring to the $256.6 million in Budget 2019 to pay $150 per student to decile 1-7 state and state-integrated schools that agree not to request donations from parents.

Transport Minister Phil Twyford said the excise increase "is absolutely necessary to overcome the infrastructure deficit that we inherited as a result of the unbalanced approach under the previous government's transport policy".

He told Newshub: "The increase in excise is funding road safety improvements to save lives and much-needed infrastructure to get our cities and regions moving."

The alternative, he said, would be "gridlock in our cities, lost productivity in the regions, and more deaths on our roads.''

The tax increase, the second of three annual hikes, comes at a time when prices at the petrol pump are creeping up.

Last month the national price for 91 increased to $2.30 from $2.05 in January. According to AA Petrol Watch, 91 was an average of $2.28 on Thursday.

The legislation passed in Parliament will give the Government an extra $363 million worth of fuel taxes over two years, Goldsmith said. That's calculated by applying this year's excise tax increase and next year's one, he said.

Goldsmith said the fuel tax increases "swamp any benefit to be gained from the potential hand-outs of the Budget," referring to big spending on efforts to ramp up mental health support and end child poverty.

In defence of rising fuel prices, Twyford pointed to the Government's announcement late last year that it would probe the retail fuel market in what would be the first Commerce Commission market study on fuel prices.

"Our Government is concerned about the price people are paying at the pump, and that's why we have directed the Commerce Commission to investigate the industry," he said.

Prime Minister Jacinda Ardern last year insisted that excise tax is only a small percentage of rising fuel prices. She said in October New Zealanders had been "fleeced" by fuel companies.

In Parliament on Friday, Twyford said the Opposition's resistance to the excise tax increase "lacks credibility and integrity". He said the previous government raised it while in power - "and now they oppose this regular increment?"

Instead of injecting money into roads, the Government announced in Budget 2019 over $1 billion in funding for KiwiRail - much of it going towards upgrading existing tracks and to purchasing new Cook Strait ferries.

Goldsmith said it showed the Government has "given in to the priorities of New Zealand First - they're obsessed with rail. Rail is an important part of the picture but it's not the whole picture".

"We'll make sure that the fuel taxes that are collected are focused on making real improvements to the lives of New Zealanders by improving the transport system."

Twyford told Newshub: "Every dollar raised through the petrol excise is spent on much-needed roads, rail and public transport."