Gareth Hughes

Fuel tax deferral won’t help

by Gareth Hughes

Kiwis are feeling the pain at the pump, and the Government’s grand “solution” is to defer a 1.5c increase in the petrol tax until next year.

Let’s put this in perspective. 1.5 cents a litre will save the average driver less than $1 when they fill up their tank. It’s about 0.6% of the total price of a litre of fuel at the moment, and it’s less than 4% of the total increase in petrol prices we’ve seen in the last 6 months.

What’s more, this is just a deferral – after the election they will have to put it up even more to recoup the $70+m they will lose in revenue this year. Guess they think if fuel prices drop they can sneak in a bigger tax rise.

The problem is that deferring the tax does nothing to prepare our economy for higher fuel prices.

The Economist blogged a while ago about how high fuel taxes are key to making economies more resilient to inevitable fluctuating (mostly high) oil prices, and stated that the revenue raised should be reinvested in alternatives like better public transport.

John Key says there’s nothing the Government can do about the international price of oil. We agree – that why we have been saying for years that we should prepare for high oil prices by investing in smarter transport projects.

As fuel prices go up, we see demand for buses, trains, walking and cycling increase. But at the moment buses are crowded, trains in Wellington are unreliable and in many places cycling isn’t safe. This won’t change unless the Government changes their transport priorities.

The Government can’t do anything about the international price of oil, and that’s why they should change their transport funding now.

I tried to get this message across on Breakfast TV this morning. Do you think I was clear enough?

Published in Environment & Resource Management | Featured by Gareth Hughes on Wed, April 27th, 2011   

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