The next fuel tax
What you’ll pay
By late 2020, new fuel taxes will mean Aucklanders are paying an average $5.77 more a week for petrol, according to figures to be released by Government ministers today.
And in a startling revelation, the ministers claim that the wealthier a household is, the more it is likely to pay for petrol. They say the wealthiest 10 per cent of households will pay $7.71 per week more for petrol. Those with the lowest incomes will pay $3.64 a week more.
This is a complete reversal of the most common complaint about fuel taxes, which is that they are “regressive”. That means, the critics say, they affect poor people more than wealthy people.
Finance Minister Grant Robertson will join Transport Minister Phil Twyford and Associate Transport Minister Julie-Anne Genter this afternoon in Auckland to reveal the details of the new excise levies on fuel.
They will also release the final form of the Government Policy Statement on Transport.
The ministers will announce that the Government’s fuel tax rise will be 4.025 cents per litre (3.5 cents plus GST), to be introduced on October 1. This will be followed by another 4.025c/litre in 2019 and a third addition of 4.025c/litre in 2020.
Speaking exclusively to the Herald yesterday, Twyford said: “This funding will allow $5 billion more investment in the next decade. The alternative is gridlock in our cities, lost productivity in the regions and more deaths on our roads.”
The Government’s fuel tax rise is likely to come on top of Auckland Council’s proposed regional fuel tax of 11.5 cents per litre (10 cents plus GST), which the council will vote on for the final time today. If adopted, that tax will come into effect this Sunday.
Opponents of the new fuel taxes, including several councillors and the National Party Opposition in Parliament, have argued that low-income people rely more on their cars than wealthy people. They also say those on low incomes have less access to public transport and drive cars that are larger and less fuel-efficient.
But the Government’s figures starkly reject that view. The data come from the Ministry of Transport, which has analysed information from the annual Household Expenditure Survey (HEC) done by Statistics NZ.
The MoT figures break the population into 10 segments, or deciles, from poorest (decile 1) to wealthiest (decile 10). They show that the wealthier a household is, the more money it is likely to spend on fuel.
In the first year the average increase for Aucklanders, who will pay both taxes, is $3.80 per week. Decile 1 Aucklanders will pay on average $2.40, for decile 5 the average will be $3.75 and for decile 10 it will be $5.08.
“It’s simply not true that fuel taxes cost low-income families more,” Twyford said.
“The figures show that the lowestincome families will be paying only a half or even a third as much as those on the highest incomes.” These figures all add to households’ existing spending on fuel. HEC data shows the overall weekly household average is $67.80. Decile 1 households spend on average $32.80 on fuel, decile 5 spend $66.90 and decile 10 households spend $113.
There are likely to be several reasons why people in lower deciles actually spend less on fuel. One is that they use public transport more, and related to that, public transport services to poorer suburbs are not as inadequate as critics claim.
Another may be that wealthier people use their cars for noncommuting reasons more often and for longer distances, such as holidays and day trips.
A third may be that wealthier households have more vehicles.
The release of the final version of the Government policy statement introduces some other changes to the draft transport funding plans.
The ratio of central Government funding to local body funding will shift a little more in favour of central funding. Details are still to be released.
“We’re shifting money away from National’s focus on a handful of billion-dollar expressways,” Twyford said. “Instead, there will be a new focus on improving roads in our regions to support growth and on making our roads safer.”