New Zealand

Government drops cost of living as Jacinda Ardern cuts fuel tax, National and Act urge her to go further

March 14, 2022 Kiwi motorists will get some relief from soaring gasoline prices, with the government reducing fuel excise duties and road user taxes by 25 cents per liter each from midnight.

The government has finally moved on the cost of living crisis, announcing on Monday a dramatic cut of 25 cents per liter in the cost of gasoline taxes and road user charges and the halving of public transport fares.

The turnaround came when Prime Minister Jacinda Ardern admitted there was a cost-of-living crisis in New Zealand, something she had been reluctant to do last week, though she said the drivers of the rising costs they came from offshore, and through no fault of his government.

The changes are only three months at this stage, though Ardern and Finance Minister Grant Robertson suggest the Budget, due in May, could make lower public transport fares permanent.

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The changes to the fuel excise duty took effect as of midnight last night (the changes to public transport will arrive on April 1), but at least one fuel dealer, Mobil, took the opportunity to lower prices almost immediately. When GST is included, the denomination is 28 cents per liter.

Ardern said the changes would mean savings of “$ 11 per tank to $ 17 per tank”.

He added that he hoped cutting public transport fares would give people the opportunity to leave their cars at home.

For nearly a week the Prime Minister refused to admit that there was a cost of living crisis. Photo / RNZ
For nearly a week the Prime Minister refused to admit that there was a cost of living crisis. Photo / RNZ

“We are also making it cheaper for those taking a bus or train. In the long run we need to build greater resilience in our transportation system so that we are less vulnerable to spikes in the price of gasoline, but for now, halve the cost of transportation. public will provide some households with an alternative to tank filling, ”Ardern said.

He said the crisis in Ukraine led to a “global energy crisis”.

Ardern said that while the crisis is not the government’s responsibility, it will seek to alleviate some of its more immediate costs.

“We cannot control the war in Ukraine or the continuing volatility in fuel prices, but we can take steps to reduce the impact on New Zealand families,” Ardern said.

Ardern’s announcement capped one of the toughest weeks in this government’s history, which began with leader Christopher Luxon pledging a $ 1.7 billion tax relief package, and moved on to National to conduct a poll for the government. first time in two years and ended with a slightly uplifting show by Ardern denying there was a cost of living crisis.

On Monday, Ardern was even forced to answer if, in the wake of that poll, she planned to stay for the next election, a question usually put to troubled national leaders (she said she would contest the election, shrugging off the resulting vote. ).

National had asked the government to permanently eliminate Auckland’s regional fuel tax of 10 cents per liter plus GST, although Deputy National Leader Nicola Willis last week refused to go so far as to demand that even the fuel exise, which applies nationwide, go.

The national team held out on Monday, with leader Christopher Luxon saying “the changes to gasoline taxes will provide some relief but will not address the broader cost of living crisis that kiwis across the country are facing.”

He reiterated his call to abolish Auckland’s regional fuel tax, as well as a number of other labor taxes.

National leader Christopher Luxon has called on the government to eliminate Auckland's regional fuel tax. Photo / Mark Mitchell
National leader Christopher Luxon has called on the government to eliminate Auckland’s regional fuel tax. Photo / Mark Mitchell

“It’s good that the government has finally accepted the existence of a cost of living crisis in New Zealand. But now they have to deal with it,” Luxon said.

Auckland Mayor Phil Goff said he still supported the tax.

“The suspension of the regional fuel tax in the current circumstances would worsen the crisis Auckland Transport is facing with the loss of hundreds of millions of dollars in public transport fares due to Covid, while the costs of building new infrastructure and operating costs are increasing rapidly, ”Goff said.

“Any reduction in revenue under these circumstances would result in the suspension of projects such as Eastern Busway and would not only delay their delivery, but would also result in much higher costs,” he said.

He also warned that loss of revenue would mean “less ability to borrow within debt for revenue constraints.”

But one of the candidates vying to replace him, Viv Beck, said she would get rid of the tax within 12 months of her appointment as mayor, saying the tax was “harming Aucklanders at a time when families across the city they are already feeling the problem. “

Law leader David Seymour asked the government to go even further, saying the $ 4.5 billion that should be raised in emissions trading system revenues in the years to 2025/26 should be recycled to consumers as a dividend. climatic.

“The Carbon Tax Refund would take each year’s revenue from ETS auctions and divide it by the population. Each adult will receive a reduction in their tax by that amount, plus the share of dependent children,” Seymour said.

Outgoing Auckland Mayor Phil Goff abides by Auckland's regional fuel tax. Photo / Dean Purcell.
Outgoing Auckland Mayor Phil Goff abides by Auckland’s regional fuel tax. Photo / Dean Purcell.

Not all parties supported the cuts.

The Greens warned against cutting taxes on fuel, with co-leader James Shaw saying he would have preferred “direct payments to people through the welfare system or through a tax credit”.

Energy Minister Megan Woods said she will keep an eye on fuel retailers to make sure they pass the cut on to consumers.

He said he now “seeks the daily disclosure of information from fuel companies on their seven-day moving average fuel margins, to monitor industry profits.”

Woods said he would like fuel companies to voluntarily give up that information, but suggested that if they don’t, he could use the new fuel pricing legislation to force them.

The move would reduce the excise duty on fuel, the main tax on gasoline, to a lower level than when the government took office. The current government raised 10.5c.

Fuel taxes and road user charges are paid directly to Waka Kotahi – NZ Transport Agency, which spends the money to maintain the road network, build new roads and subsidize public transport.

The government would compensate for lost revenue due to cuts in fuel taxes and road user charges by granting Waka Kotahi a grant from the Covid fund of approximately $ 350 million.

Robertson said this cost would be covered through “savings and re-prioritization”.

“This means we can continue the government’s record investment in transportation infrastructure without having to cut projects,” he said.

Government drops cost of living as Jacinda Ardern cuts fuel tax, National and Act urge her to go further

SourceGovernment drops cost of living as Jacinda Ardern cuts fuel tax, National and Act urge her to go further

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