Higher fuel tax a faulty mechanism

02:03, Dec 19 2012

Raising taxes on fuel is among the most blunt instruments available to the Government to raise money.

It is pervasive and it affects everyone, in one way or another.

Yesterday, Transport Minister Gerry Brownlee said the intention was to whack on 9 cents of excise tax to every litre of petrol.

But don't worry, it will be split into 3-cent increments each year. How convenient.

It's easy to sling mud at politicians for being out of touch with the "average" New Zealander, because of all the expenses and freebies they are entitled to.

In this case, though, the shoe seems to fit.


While not at all-time highs, 91 octane petrol is still historically expensive, sitting at about $2.05 per litre. It has been higher, but as recently as January 2009 it was a little over $1.30.

The planned rises are incremental, but they hit everyone; from families going about their daily business to large companies who need to move products and freight around the country.

And for what? For massive road projects that otherwise wouldn't be built.

The theory behind targeted tax rises makes sense. But when a litre of gas starts to cost around $2.20, (who really knows how high it will be in three years' time?) people and voters will start to bite back.

If the Government is intent on building these roads it really needs another tool, rather than just taking more from fuel excise taxes.

At the moment, about 70 cents of each litre of 91 petrol is already made up of Government taxes.

Toll roads, public-private partnerships and a wider tax over more people need to be considered.

Those against a wider tax "because they don't use the roads" need to realise that a smoothly-run road network is integral to keeping the country running.

A beefed-up petrol tax is not the answer to our country's roading issues. We are a long, skinny country with a small population that is used to pay for our roads. We shouldn't expect the same quality of roads as countries with huge populations and tax bases. But it seems that is the option this Government is taking.

As the Novopay saga drags on, it really does beg the question: Was the previous system really so bad? You never heard any stories of people being massively overpaid, underpaid or not paid then. The credibility of the new system is shot and you wonder if it can ever recover, considering a Palmerston North school was "overpaid" $7 million in the last pay cycle. The best payroll systems quietly go about their work. Too bad Novopay is still making plenty of noise.

Manawatu Standard