Businesses to save on ACC levies

The Government will reduce the ACC work levy paid by business and the selfemployed, saving businesses $100 million over the next two years, Prime Minister Jacinda Ardern and ACC Minister Iain Lees-Galloway have announced.

It will hold all other ACC levies at their current rates.

The average work levies paid by employers and self-employed people will decrease from 72 cents to 67 cents per $100 of liable earnings (a 6.9 per cent decrease). That is in line with a recommendation from ACC in September.

“When the rises in ACC levies was first discussed the Government took a clear position that a compelling case would need to be presented in order for us to agree to levy increases, and that Cabinet would consider the wider public interest,” Ardern said at her post-Cabinet press conference yesterday.

“We have done just that and concluded that the levies would not increase, and actually decrease for work levies paid by employers and self-employed people. This will save New Zealand businesses and their customers around $100 million over the next two years compared to current rates.

Other key aspects of the ACC levies for 2019/20 and 2020/12 include:

Earners levies paid through PAYE (or invoiced directly through ACC for self-employed people) will stay at $1.21 per $100 of liable earnings

The average motor vehicle levies, which include the annual licence levy and petrol levy, will remain at $113.94.

Lees-Galloway said the motorists’ and earners’ levies would remain the same for the next two years. He also said the ACC Vehicle Risk Rating (VRR) programme would end.

“The VRR programme, which applies different levy rates to different makes and models of cars based on their safety ratings, is challenging for ACC to administer and lacks evidence that it is contributing to a safer vehicle fleet in New Zealand,” he said.

“There is no evidence that variable levies based on VRR contribute to injury prevention or encourage the purchase of cars with higher safety ratings.”

The new work and earners levies will come into effect on April 1, 2019. The vehicle risk rating will no longer apply from July 1, 2019, with the motor vehicle rates coming into effect on the same date.

Of the move on business levies, ACC chief customer officer Emma Powell said in October that more people were returning to work earlier and “the biggest portion of our cost base is coming down, with less compensation being paid out than anticipated”.