Farmers Opposed to Subsidising Public Transport

21 May 2007

Farmers Opposed to Subsidising Public Transport

Farmers strongly oppose the tax on fuel to fund public transport, said Don Nicolson, Federated Farmers Vice President.

Mr Nicolson was commenting on last week’s Budget announcement that will enable regions to impose a regional fuel tax of up to 10 cents per litre of which a significant portion will be required to be used to fund public transport.

“It is totally inappropriate for farmers to subsidise public transport, a service the vast majority of rural people never use or derive any benefit from.

“It is also wrong for diesel to be taxed for this purpose when so much of it is used off-road, for example for agricultural machinery. While refunds will be available the refund process will be onerous and yet another compliance cost.

“This new tax will hit farmers both directly at the pump and indirectly through higher freight rates as the transport industry passes on its costs. Farmers already struggling with a severe margin squeeze will be troubled by the Road Transport Forum’s warning that a 10 cent per litre diesel tax would increase freight rates by about 1.4 percent.

“Some are saying that this is just an Auckland issue. They are wrong: it is a national issue. Not only is it likely that other regions will implement the tax, but in the 1990s fuel companies averaged the short-lived regional petrol tax meaning that everybody paid. There is nothing stopping a repeat this time around.

“Imposing this new tax will only worsen the plight of the productive sector at a time of high interest rates and a high exchange rate and it is yet another decision that shows a failure to understand rural New Zealand,” said Mr Nicolson.

ENDS

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