Tax-rise claim ‘just wrong’: economist
Transport Minister Phil Twyford says looming fuel taxes have been ‘‘carefully designed’’ to minimise the impact on families, but opponents say they hit the poor four times harder than the rich.
Yesterday, Twyford’s office revealed Transport Ministry figures on the estimated impact of a series of excise tax rises over three years, as well as the Auckland regional fuel tax.
On October 1, excise tax on petrol will increase by 3.5 cents a litre nationwide (just over 4c a litre, including GST), while on Sunday, petrol companies will pay another 11.5c in tax for every litre of petrol sold in Auckland.
According to the figures, by 2020, the impact on the average household outside Auckland will be $2.50 a week. In Auckland it will be $5.77 a week.
The analysis appears to be based on the Government’s assumption that the impact of the Auckland regional fuel tax will not spread across the rest of New Zealand, something the Ministry of Transport, the AA and others have warned is a major risk.
The figures provided by the Government claim that poorer households will pay less, with ‘‘decile one’’ households in Auckland, those on the lowest 10 per cent of incomes, paying $3.64 a week extra, ranging up to the top 10 per cent of incomes paying $7.71.
Outside Auckland, the poorest households will pay an extra $1.29 a week, rising up to $4.29 a week in the richest households.
‘‘This move has been carefully designed to minimise the impact on families while unlocking the invest- ment we urgently need,’’ Twyford said in a statement. His office later clarified that the statement referred to the fact that the increases were being spread over three years.
Twyford himself has acknowledged in Parliament that the tax is regressive, meaning it has a disproportionate impact on poorer households.
Sam Warburton, an economist at the New Zealand Initiative, dismissed the figures, saying they took no account of the fact that many poorer people, especially younger people and students, drove very little. The figures were presented in a way that averaged the impact across everyone.
The claim that the tax minimised the impact on families was ‘‘just wrong’’, Warburton said.
Based on the average Auckland driver travelling slightly less than 10,000 kilometres a year, Warburton said the tax would add about $140 a year in costs on someone driving one of the 10 per cent of the most fuel-efficient cars available. In one of the least-efficient cars, the added cost was likely to be about $270 a year.
Warburton said poorer people tended to own older cars and have larger families, meaning their cars were larger on average. This meant those households used more fuel on each journey than wealthier families.
‘‘The minister may not realise how misleading the data is,’’ he said.
Thomas Lumley, a professor of biostatistics at the University of Auckland, said that although wealthier households tended to spend more on fuel than poorer ones, they also tended to spend more on food and other items, but not as a share of income.
‘‘Any user charge is going to be a lower proportion of income for wealthy than poor households. The regional fuel tax is no exception,’’ he said yesterday.