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Petrol tax hike kicks in

AIMEE GULLIVER AND LAURA WALTERS
Last updated 12:16 01/07/2013
Fairfax NZ

The Government's excise tax increase came into effect, pushing petrol prices up to the highest they've been in four months.

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Petrol prices are up 3 cents a litre on the back of the first of a series of excise tax hikes that most major oil companies will pass on to customers.

BP, Caltex and Z are lifting pump prices by 3c a litre today - to about $2.20 per litre - but all three are absorbing the accompanying extra GST of just under half a cent per litre.

"It is important to distinguish between this government-implemented tax increase and a normal market increase which would be influenced by components such as the price on the international market, or the exchange rate,'' BP spokesman Jonty Mills said.

"We have a really slim profit margin so there is no room to absorb an increase in our cost," Z spokeswoman Sheena Thomas said

AA Petrolwatch spokesman Mark Stockdale said the increase was signalled in December and was the first of three over three years.

The increase was in line with rises in previous years and was adjusted to keep up with inflationary increases in the cost of road maintenance and road building, Stockdale said.

This would bring the cost of 91-Octane petrol to about $2.20 a litre.

The tax needed to be increased because the amount the Government had been collecting from petrol tax had been falling as cars had become more fuel-efficient, Stockdale said.

He said motorists were used to changes in petrol prices, with recent increases in the fuel commodity price and the fall in the New Zealand dollar.

The increase in the commodity price led to a 4c rise in petrol prices in June. However there were significant falls from March to May, he said.

"As [commodity] prices become increasingly higher people will look at how they manage their fuel budget," he said, adding this could include car pooling, using public transport, and taking advantage of supermarket discount vouchers.

The price competition between petrol retailers was also likely to continue, Stockdale said.

Diesel prices will be unaffected, but road user charges rose by 10 per cent today. The AA thought an increase of 5 per cent would have been more appropriate, Stockdale said.

The money collected from the excise tax also went towards subsidising public transport, and road safety enforcement.

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